Not protecting the $36 billion in preferred which was mostly owned by the banks is a huge negative for financial equities. Here is a quote from the Treasury today.


There is definitely some nervousness. From the statement:
'The agencies encourage depository institutions to contact their primary federal regulator if they believe that losses on their holdings of Fannie Mae or Freddie Mac common or preferred shares, whether realized or unrealized, are likely to reduce their regulatory capital below "well capitalized." The banking agencies are prepared to work with the affected institutions to develop capital restoration plans consistent with the capital regulations.'

Also, given this part and the fact that the ambiguity has moved from FNM/FRE to the treasury in terms of how much this is going to cost you'd think treasury yields will have to climb:
"Our nation has tolerated these ambiguities for too long, and as a result GSE debt and MBS are held by central banks and investors throughout the United States and around the world who believe them to be virtually risk-free. Because the U.S. Government created these ambiguities, we have a responsibility to both avert and ultimately address the systemic risk now posed by the scale and breadth of the holdings of GSE debt and MBS."