Rafferty Capital Dick Bove Highlights 'Gargantuan' News on Fannie Mae (FNMA)

Rafferty Capital analyst Dick Bove weighed in on Fannie Mae (OTC: FNMA) after what he called "gargantuan" news.

Bove notes, "Senator Charles Grassley (R.; IA), the head of the Senate Judiciary Committee, has apparently sent letters to the Attorney General and the Secretary of the Treasury requesting information on the why and how of the so-called Third Amendment. This is the amendment to the Senior Preferred stock of Fannie Mae that allows the Treasury to expropriate more than 100% of the company’s earnings each quarter."

He continues, "Senator Grassley wants to know why the Treasury refuses to provide any information concerning the decision to create the Third Amendment, to the courts. He also wants to understand why the actions taken by the Treasury were legal."

"This is the right guy asking the right questions at the right time. He is doing it because the Administration may have overplayed its hand in dealing with Fannie Mae. The Administration is taking all of the capital out of the company and intends that by 2018 it will have no capital at all. At the same time, the Administration and its dupe the Wall Street Journal are claiming that Fannie Mae will need another taxpayer bailout."

"Finally, it is beginning to dawn on the Congress and the somnolent press that this makes no sense. One cannot bankrupt a company and then claim that it needs help."

"The world is waking up to the outrages here," Bove exclaims. "What seemed so bleak in this situation a week ago has now been meaningfully reversed."

The analyst has a Buy rating and price target of $4.75 on FNMA.

For an analyst ratings summary and ratings history on Fannie Mae click here. For more ratings news on Fannie Mae click here.

Shares of Fannie Mae closed at $2.49 yesterday.

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