American mortgage duo has stock woes
By J. W. Elphinstone |
June 18, 2010, Friday
|
Print Edition
Print Edition
FEDERALLY backed American mortgage purchasers Fannie Mae and Freddie Mac plan to delist their shares from the New York Stock Exchange after their stocks had trouble meeting requirements.
Shares of both firms tumbled. Fannie Mae stocks dropped 42 US cents, or 46 percent to 50 cents, while Freddie Mac slid 58 cents, or 48 percent, to 64 cents in afternoon trading.
The companies' regulator, the Federal Housing Finance Agency, said on Wednesday that Fannie's shares had been below the US$1 average price level for 30 trading days.
NYSE rules require a company to take action to boost its shares or delist. Freddie's shares have hovered close to the US$1 mark.
The move to delist "simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets," said FHFA Acting Director Edward J. DeMarco.
The agency expects Fannie Mae and Freddie Mac shares to trade, starting next month, on the Over-the-Counter Bulletin Board.
"It's logical," said Keefe, Bruyette & Woods analyst Bose George. "The pretense that they were public companies didn't make sense. They were kept around so the government could pursue its housing goals."
The government took over the pair in September 2008 after they suffered heavy loan losses following the housing crash. So far, it has cost US$145 billion and is likely to be the most expensive of all the financial bailouts.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for the companies, lifting an earlier cap of US$400 billion.
And the housing market is still on shaky ground.
Shares of both firms tumbled. Fannie Mae stocks dropped 42 US cents, or 46 percent to 50 cents, while Freddie Mac slid 58 cents, or 48 percent, to 64 cents in afternoon trading.
The companies' regulator, the Federal Housing Finance Agency, said on Wednesday that Fannie's shares had been below the US$1 average price level for 30 trading days.
NYSE rules require a company to take action to boost its shares or delist. Freddie's shares have hovered close to the US$1 mark.
The move to delist "simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets," said FHFA Acting Director Edward J. DeMarco.
The agency expects Fannie Mae and Freddie Mac shares to trade, starting next month, on the Over-the-Counter Bulletin Board.
"It's logical," said Keefe, Bruyette & Woods analyst Bose George. "The pretense that they were public companies didn't make sense. They were kept around so the government could pursue its housing goals."
The government took over the pair in September 2008 after they suffered heavy loan losses following the housing crash. So far, it has cost US$145 billion and is likely to be the most expensive of all the financial bailouts.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for the companies, lifting an earlier cap of US$400 billion.
And the housing market is still on shaky ground.
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