2 of 7
What happens to Fannie and Freddie investors?
"In terms of federal government piggy banks, there is not a lot left,” said one analyst.
In addition to figuring out the future of the GSEs, policymakers must decide what occurs to those who invested in Fannie and Freddie both prior to and after the seizure by the government.

Several hedge funds have effectively made big bets on the GSEs by buying up stock after they were placed into conservatorship for pennies on the dollar with hopes that a new system will reward investors handsomely if the companies are returned to the private sector.

Lawmakers are divided on whether the investors should be rewarded, but how that issue is resolved could help determine some votes in a closely-divided Congress.

The Obama Administration wound up entangled in a legal battle over whether the preferred shareholders have a legitimate claim to Fannie and Freddie. That litigation continues and could muddy attempts at reform.

“Do you have a situation where ... if Fannie and Freddie were allowed to be maintained at the future system … the legacy shareholders got 20% of the new company?” said Ed Mills, a policy analyst at Raymond James. “It is still in a court so the shareholders haven’t really won yet, but it’s not fully resolved.”

Treasury has warrants for a 79.9% stake in Fannie and Freddie and could sell its stake if accompanied by some other reforms.

“In terms of federal government piggy banks, there is not a lot left,” Mills said.