A potential topic for my second paper could be Fannie Mae and Freddie Mac. These are government sponsored entities (GSEs) who did have shareholders. Everyone assumed that they were backed by the US government and therefore limited the risk of investing in them because the government would not let them go bankrupt. After the recession the government did in fact step in, avoiding bankruptcy, but their share prices lost over 99% of their value from 2007 to the end of 2008. The share price has yet to recover even a little bit.
It would be interesting to see the interaction between the government, these companies’ shareholder, and their stakeholders during the crisis. It can be argued that these entities focused far too much on bettering society by offering homes to a wide range of people rather than running a business, or perhaps they were caught up in the same mortgage buying frenzy and profit chasing that Wall Street was.
Fannie Mae and Freddie Mac received the most and second most bailout money, more than any other company. As of September 2012, Fannie Mae and Freddie Mac have paid back the lowest percentage of their loans than the banks, AIG, or the auto industry. The two entities received a combined $187 billion bailout and paid back $50 billion of it. There are numerous lawsuits against these companies outstanding, concerning everything from foreclosed properties, securities fraud, and misleading investors. Adding in the element of government being so closely tied with these companies could certainly put a twist on the classic shareholder/stakeholder debate and make for an interesting paper.