Freddie and Fannie Trades Bet on Elizabeth Warren

NEW YORK (TheStreet) -- Fannie Mae (FNMA) and Freddie Mac (FMCC) , the evil twins blamed for the housing crisis, seem to be coming back from the dead.

As our Philip van Doorn reports, the hope is, both can recapture massive tax valuation allowances with which they could repay some of their government bailouts.

The full recapture of the deferred tax assets would provide Fannie and Freddie with $93.2 billion, going quite a long way to a fully redemption of $188.3 billion in preferred shares held by the government.

Back in 2007 Freddie and Fannie were seen as licenses to print money. Both sold at over $60/share. The latest speculative bubble has both of them trading at around 85 cents/share.

The two companies were rendered worthless by the bailout's terms, under which the Treasury Department got preferred stock paying a 10% dividend whether or not they were profitable. This meant they were borrowing to pay dividends. Reuters says that only $58 billion of the bailout has been repaid. Both are now profitable on an operating basis.

But wait, there's more.

Marketwatch reports a bipartisan group of U.S. senators introduced the "Jumpstart GSE Reform Act," which would keep the government from just funneling money from loan guarantees into the Treasury, and perhaps let Fannie and Freddie arise like little Frankenstein monsters. The sponsors are Bob Corker of Tennessee, David Vitter of Louisiana, Mark Warner of Virginia and ... Elizabeth Warren?

That's right, gang, speculators are betting on Elizabeth Warren to save Fannie and Freddie. Warren, former Harvard professor, designer of the dreaded Consumer Financial Protection Bureau, and mild-mannered populist who defeated the Clark Kent stand-in, Scott Brown, last November to become senator from Massachusetts. THAT Elizabeth Warren.