NYSE delists Freddie Mac and Fannie Mae stocks making losses get bigger

Freddie Mac and Fannie Mae were ordered by the government to cease trading their shares on the New York Stock Exchange to abide by NYSE delisting rules. Freddie Mac and Fannie Mae stocks, which have already lost nearly all their value, fell further when the markets got the news. After the delisting, which was ordered to meet NYSE requirements for maintaining their price levels, the stocks of the two companies will be traded within the over-the-counter market.

Article Source: Freddie Mac and Fannie Mae stocks delisted from NYSE, losses grow

Delisting rules of the NYSE

Freddie Mac and Fannie Mae were delisted because NYSE delisting rules require that a business pull its stock if it can’t do anything to keep shares from dropping below the $ 1 average price level for 30 trading days. The Associated Press reports that following the NYSE delisting announcement Fannie Mae shares dropped 42 cents, or 46 percent to 50 cents, when Freddie Mac slid 55 cents, or 45 percent, to 67 cents. In 2007, shares of both companies traded at a lot more than $ 60. As the housing crisis deepened, the stocks lost almost all of their value as they went below $ 1 by September 2008. The government took over Fannie and Freddie.

Fannie Mae and Freddie Mac losses

The companies guarantee 31 million home loans worth $ 5.5 trillion. That's around half of all US mortgages. CNNMoney.com reports that given that September 2008, the Treasury Department has poured $ 83.6 billion into Fannie Mae and $ 61.3 billion into Freddie Mac to cover losses. During the housing crisis, the money has kept lending to home buyers, kept home sales and new home construction from falling further than it has, and has also kept homes from losing more value than they have. But Freddie Mac/Fannie Mae losses totaled $ 93.6 billion in 2009 and then totaled one more $ 18.2 billion within the first quarter this year. The Congressional Spending budget Office estimates that nearly $ 400 billion in tax dollars will eventually be needed to cover Freddie Mac/Fannie Mae losses, making it probably the most expensive of all the government bailouts that they have done in previous years.

Fannie Mae/Freddie Mac stock delisted July 8

By July 8th, Freddie and Fannie can have delisted from the NYSE. The Wall Street Journal reports the NYSE delisting meets the goals of government conservatorship. By delisting, Fannie and Freddie should both save $ 500,000 a year. Both companies paid the maximum amount.

Fanny Mae/Freddie Mac OTC stock

Fannie and Freddie stock can be traded over the counter after July 8. Brokers will negotiate directly with one an additional for Fannie and Freddie stock over computer networks and by phone. OTC stocks are typically very risky to take because they’re the stocks that aren’t considered large enough or stable enough to trade on the New York Stock Exchange. These stocks have research that is hard to find. With the delisting, David Lutz, managing director of equity trading at Stifel Nicolaus and Co. in Baltimore, explained to Business Week that "We lose some transparency into what is basically a large black hole that is eating up a large part of our bailout funds."

Citations

Associated Press

google.com/hostednews/ap/article/ALeqM5gKpMFnJoJc8QkAW3abF41E4d492QD9GCEEC00

CNN Money.com

money.cnn.com/2010/06/16/news/fannie_freddie_delisting/

Wall Street Journal

online.wsj.com/article/SB10001424052748704198004575310443796994402.html?mod=rss_Today’s_Most_Popular

businessweek.com

businessweek.com/news/2010-06-16/fannie-freddie-plunge-after-moving-to-delist-shares-update2-.html