It seems remarkable, given the lurid headlines and negative reactions, that the Lehman Brothers’ equity research on Fannie and Freddie published at the beginning of July suggested that the agencies’ underperforming stocks were good value over the long term.
Not many in the market, especially not the authors of the report, believe that new accounting rules (FAS 140), which would require many billions of additional capital, would be imposed on the government-sponsored enterprises. Nevertheless, the market decided to pick up on the vague possibility of an additional $46 billion and $29 billion of capital...
