Fannie, Freddie to Delist from NYSE

By:: Kirk Haverkamp | June 16, 2010

Government-supported lenders Fannie Mae and Freddie Mac have been directed to withdraw their stock from listing on the New York Stock Exchange (NYSE), after continued weak performance of their common stock.

The order came from the Federal Housing Finance Agency, which has been the two lender’s parent agency since they were placed in conservatorship in September 2008. The move comes after the NYSE informed Fannie Mae it had to undertake mandatory “cures” to boost its share price in order to maintain its listing on the exchange.

"FHFA’s determination to direct each company to delist does not constitute any reflection on either Enterprise’s current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator," said Edward DeMarco, acting director of FHFA. “The determination to direct delisting is related to stock exchange requirements for maintaining price levels and curing deficiencies.”

Both Fannie Mae and Freddie Mac’s common stock have lingered near the $1 a share minimum required by the NYSE since being placed in conservatorship. Fannie Mae’s stock recently fell below the $1 mark for 30 consecutive days, triggering the NYSE requirement that the stock either undertake “cures” to raise the price or else be withdrawn from the exchange.

Because Freddie Mac’s common stock has also been hovering near the $1 minimum and both agencies are in conservatorship together, FHFA decided to simply withdraw both from the exchange.

“A voluntary delisting at this time simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets,” said DeMarco.

Following delisting from the NYSE, Fannie Mae and Freddie Mac stock will be traded through the Over-the-Counter Bulletin Board, an electronic trading service for over-the-counter securities.

Both Fannie Mae and Freddie Mac were created by the federal government to support mortgage lending by providing a secondary market for the purchase and sale of mortgage securities. Both were subsequently spun off into private entities, but were brought back under government conservatorship after suffering major losses in the collapse of the subprime mortgage market.

The two lenders combined back about half of all outstanding mortgages on the U.S. market.

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