‘Preferred’ investors in big banks ought to be wondering

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The Treasury surprised a lot of people on Wall Street by sacrificing the preferred-stock owners of Fannie Mae and Freddie Mac in the rescue package.

They’ll stop earning dividends, and they’re now on notice that their shares ultimately may be worthless -- depending on how much capital taxpayers will have to put up to keep the companies afloat.

So let’s say you’re a pension fund or other big investor who owns preferred shares in some of the biggest U.S. banks -- say, Citigroup Inc., Bank of America Corp. or JPMorgan Chase & Co.

If you’re worried that there’s even a modest chance that one of those banks could need government help to survive (because they’re most likely too big to fail), you now see that Uncle Sam regards preferred shareholders as expendable.

Are the stocks worth the risk?

‘Preferred stocks are going to be for sale all over the place’ on Monday, said Jeffrey Gundlach, chief investment officer at L.A.-based TCW Group, parent of Trust Co. of the West.

And he doubts that the stock market overall will get anything more than a temporary lift from the rescue announcement.

‘How is this good news?’ Gundlach asks. ‘All it says is that things are really, really bad.’