Daily Archives: January 24, 2009

As Freddie Mac (FRE) Requests More Cash, The Scope Of The Bailout Gets Much Bigger

EmpireThe Treasury has provided loan facilities of up to $100 billion for both Fannie Mae (FNM) and Freddie Mac (FRE). Freddie Mac is preparing to ask for $35 billion from its pool. It has already drawn down almost $14 billion. It anticipates that its fourth quarter losses will require it to make the next pull.

Industry observers believe that Fannie Mae faces nearly identical problems so it will be making its own request for more funds shortly.

The news points to the fact that another big request for new capital will come from several large financial firms which are finding that 2009 maybe a worse year than 2008 was.

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Posted on: January 24, 2009 – 8:51 am in Economy, ,

Stealing From Shareholders By Resetting Stock Option Prices

SunsetGoogle (GOOG) made the decision to reset the prices on some of its employee stock options. As the company works to retain employees it make sense. Options set at $500 may not do Google any good, ever. Workers who have seen part of their compensation devalued may leave. Google will not get cash when employees turn in options for stock and then sell that stock in the open market to make money..

Google shares trade at $325.  A lengthy recession and slowing growth at the search company could pressure its stock for years.

Google will have to take a non-cash charge for the resetting.. Giving people options at lower prices is considered extra "compensation". Google argues this is a small price to pay for retaining valuable talent. If enough key people leave, the stock price could drop even more

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Posted on: January 24, 2009 – 8:03 am in Shareholder Issues,