Monday, Nov. 03, 2008

The Fannie and Freddie bond jackpot

When the federal government swooped in and took control of mortgage lenders Fannie Mae and Freddie Mac in September, shareholders were virtually wiped out. But the deal protected the companies' bondholders. That mean big gains for those — such as investment giant Pimco, whose chief, Bill Gross, was among the loudest advocates of the bailout — that had loaded up on the companies' debt.