Early Briefing: Changes Start at Fannie, Freddie
*The new chief executives of Fannie Mae and Freddie Mac arrived at the companies' campuses and set about the challenging task of expanding their funding of mortgages in the near term and protecting taxpayers from losses in the long term. Once among the biggest companies in the country, Fannie Mae and Freddie Mac are now penny stocks: Fannie Mae closed at 73 cents a share, and Freddie Mac shares went for 88 cents, down 83 percent.
*The ousted chief executives of Fannie and Freddie have the potential to exit with golden parachutes, but the government could cut the strings. The severance packages could be worth as much as $14.9 million for Richard F. Syron, the former Freddie chairman and chief executive, and as much as $9.8 million for Daniel H. Mudd, the former Fannie chief executive, said David M. Schmidt, a senior consultant for the executive pay consultancy James F. Reda & Associates.
*The bailout of Fannie Mae and Freddie Mac threatens the financial health of several dozen of the banks that bought shares in the two companies, regulators say, including some institutions active in the Washington region and banks focused on less-profitable community development lending.
The Washington area local banks that may be affected include Gateway Financial Holdings of Virginia Beach, which bought $40 million in shares that were worth only $5 million at the end of trading yesterday, and Virginia Central Bank of Richmond, which said it would be "on the bubble" of needing to raise more capital if its holdings lose all of their value.
*Five local car dealerships agreed to stop using misleading prices and prize offers in advertisements in a settlement with the Montgomery County Office of Consumer Protection. They were Castle Ford of Silver Spring; Sport Chevrolet in Silver Spring and its advertising agency, Laurel-based Kell Communications; Ourisman Rockmont Chevrolet in Rockville; Ourisman Wheaton Plaza Chevrolet in Wheaton; and Victory Nissan in Gaithersburg, which has since been bought by Criswell Automotive. The dealerships did not admit wrongdoing.
*GeoEye said it expected to reverse $29.5 million in tax interest and penalties dating to 2005. The Dulles provider of satellite imagery said it filed restated financial results for fiscal years 2005 to 2007 and for the quarters ended Sept. 30, 2007, and March 31, 2008. The filings resolve issues surrounding the proper time periods of penalties and interest related to payments the National Geospatial-Intelligence Agency made to GeoEye under the terms of the government's NextView contract, GeoEye said.
*Alice Fisher, the former head of the Justice Department's criminal division, is rejoining the 2,100-lawyer firm Latham & Watkins, where she practiced before working for the government. She will be global co-chair of the white-collar and government investigations group, Latham said.
*Spherix said it would seek shareholder approval of a reverse stock split in hopes of maintaining its listing on the Nasdaq Global Market exchange. Nasdaq has warned that the Bethesda consultant to biotech and pharmaceutical copmanies could be delisted because its shares have traded for less than $1. Spherix said a reverse split would reduce the number of shares and result in a higher stock price. The company said it would seek a reverse split in the range of 1:5 to 1:20, with the exact ratio to be determined later.
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