Paulson changes the rules of the capital game
http://money.cnn.com/2008/09/08/news/economy/barr_paulson.fortune/index.htm?source=yahoo_quote

below excerpt, I reccomend you read its entirety (let's worry LESS about NEWS STORIES AND GOV ACTION and MORE on MAKRETS REACTION and TA)

By taking control of Fannie and Freddie, the Treasury Secretary risks making it harder for other troubled financial firms to raise money.
By Colin Barr, senior writer

September 8, 2008: 7:44 AM EDT

NEW YORK (Fortune) -- Treasury Secretary Henry Paulson has tamed the two-headed housing-market beast known as Fannie Mae and Freddie Mac - but not without adding to the uncertainty swirling through the financial sector.

Paulson announced plans Sunday to put Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) under government custody, including replacing their CEOs, ending common and preferred dividends and creating a new class of preferred stock that will be senior to existing shares - meaning existing shareholder stakes were made less valuable.

The move aims to assuage bondholders' fears about the creditworthiness of the companies, and to persuade the foreign central banks that have been big buyers of Fannie and Freddie bonds that their investments are safe.

If investors buy into Paulson's program, mortgage rates should fall because Fannie and Freddie's borrowing costs will fall. That, in turn, could lessen the steepness of the decline in home prices.
But with the economy slowing and the U.S. financial system under severe stress from the collapse of the housing bubble, it's not clear that even full government backing for Fannie and Freddie will bring mortgage rates down substantially.

And, Monday's financial sector rally notwithstanding, Paulson's action carries risk: By raising questions about the terms on which the government intervenes with companies deemed too big to fail, Sunday's action could reduce access to private capital for struggling financial firms.

That the markets had their doubts about Fannie and Freddie is no secret. The 90%-plus plunge in their shares over the past year shows there was substantial doubt about the companies' finances over the long haul.

A surprise move
Yet Sunday's placement of Fannie and Freddie under government ownership nonetheless came as something of a surprise. In contrast to Bear Stearns, the brokerage firm that ran out of cash in March and was dashed off in a Fed-brokered fire sale to JPMorgan Chase (JPM, Fortune 500), Fannie and Freddie had plenty of cash on hand and weren't on the verge of collapse.