Fannie and Freddie Ordered to Delist from NYSE
Posted by Larry Doyle on June 16, 2010 11:28 AM |
Fannie and Freddie don’t live here anymore.
News just broke that the stocks of our two government stepchildren, Fannie Mae and Freddie Mac, have been ordered to delist from the NYSE. The Washington Post reports, Fannie Mae, Freddie Mac to Delist Shares from NYSE:
The companies’ regulator, the Federal Housing Finance Agency, said Wednesday that it expects Fannie Mae and Freddie Mac shares to trade on the Over-the-Counter Bulletin Board, an electronic quotation service.
The move to delist the shares isn’t a surprise. The crash in the housing market has pounded Fannie Mae and Freddie Mac with heavy loan losses since 2007. Fannie shares have been below the $1 average price level for 30 trading days. NYSE rules require a company to take action to boost its shares or delist.
The simple fact is these stocks should have been delisted a long time ago and certainly no later than Christmas Eve 2009. Remember that afternoon, along with your egg nog, you received a bill from Uncle Sam to support these stepchildren with a blank check. At that time, I highlighted in my commentary Fannie and Freddie’s Blank Check Will Further Fuel America’s Rage:
Why aren’t these stocks delisted immediately? To allow stock in these entities to continue to trade is a total mockery of a legitimate market.
I believed then and still believe now that the trading of Freddie and Fannie since that point, if not prior to that, was a sham in which the NYSE allowed the churning of these shares by high frequency traders. For the privilege of churning the shares, the high frequency traders were paid rebates by the exchange. Call it what you want, but I call that a mockery and a sham. Equity exchanges were once founded upon the principle of the free flow of capital. Under the current construct of our equity exchanges, that is no longer the case.
In regard to our financial stepchildren, Fannie and Freddie, the fact that they are only now delisting is a joke. Regrettably, the joke is neither funny nor inexpensive and will be a burden upon American taxpayers for a long time.