Federal Housing Finance Agency (FHFA), has ordered government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to delist from the New York Stock exchange. The NYSE asks companies trading below $1 to either take corrective action or delist.
It seems fitting that that the FHFA chose to delist Fannie and Freddie as there has been a huge reluctance to take action, as former FDIC Chairman William (Bill) Isaac points out in his Futures interview that will be published in our July issue.
Fannie and Freddie have become a political football as many prominent Democrats, including the president, received large contributions from the GSEs. Republicans and many in the right wing press would like to lay the entire financial crisis at the feet of these agencies, which is a huge and inaccurate stretch, but there is no denying that they played an important role in the economic breakdown. As Isaac put it, for that not to be addressed in the current legislation on financial reform is “dumbfounding.”
Below is a chart of Fannie Mae. As you can see as the commercial says, it has fallen and can’t get up. The Freddie Mac chart appears nearly identical.
Delisting doesn’t mean that you will no longer be able to trade them, though apparently they will be under a different symbol. Hopefully delisting will not mean Congress and regulators will be able to ignore them as they did in the recently-passed Senate bill because they continue to represent a huge liability to all taxpayers.
Tags: Fannie Mae, Freddie Mac, regulation
