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America's Fannie and Freddie have shrunk by 99% in three years and severely injured shareholders after delisting
Source: | Author:finance-94 | Publish time: 2019-05-02 | 59 Views | Share:
The Federal Housing Finance Agency issued a statement on June 16 asking Fannie Mae and Freddie Mac to delist from the New York Stock Exchange. Analysts say that "Fannie and Freddie" as listed companies have long been worthless, delisting is inevitable, now the question is how to do after delisting.
The Federal Housing Finance Agency issued a statement on June 16 asking Fannie Mae and Freddie Mac to delist from the New York Stock Exchange. Analysts say that "Fannie and Freddie" as listed companies have long been worthless, delisting is inevitable, now the question is how to do after delisting.           
Fannie and Freddie are the main providers of housing finance in the United States, which suffered heavy losses in the subprime crisis that began in 2007. But without Fannie and Freddie, home buyers would have no money to lend, and housing sales and new housing starts would suffer more losses. For this reason, the U.S. government took over Fannie and Freddie in September 2008 and injected $145 billion into them. Because of the sluggish real estate market in the United States, "Fannie and Freddie" performance has not improved. Fannie and Freddie lost 93.6 billion dollars in 2009 and 18.2 billion dollars in the first quarter of this year. The U.S. Congressional Budget Office said Fannie and Freddie could not make a profit in a few years, resulting in taxpayers ultimately paying out $400 billion in bailouts.           
DeMarco, executive director of the Federal Housing Finance Agency, said the delisting of Fannie and Freddie had nothing to do with their operations or government policies, but because their share prices were too low to meet the minimum requirements of the New York Stock Exchange. The New York Stock Exchange will require a listed company to delist if its closing price falls below $1 for 30 consecutive trading days and has not improved after six months. Fannie Mae and Freddie Mac, on the other hand, spent more than two years trading at prices below $1 on most trading days. The Federal Housing Finance Agency said the cost of trying to boost the prices of Fannie and Freddie was too high to allow them to delist automatically, which would better protect assets.           
Currently, 80% of Fannie and Freddie are owned by American taxpayers. Delisting from the market will result in the loss of capital of existing ordinary shareholders of Fannie and Freddie, but preferred shareholders may have some recourse rights. Fannie and Freddie's shares plunged 40% on the New York Stock Exchange on the 16th. In September 2007, Fannie Mae's share price peaked at $99 a share, the Financial Times reported Wednesday. On June 16 this year, the stock was worth only 55 cents. Freddie Mac was trading at $48 a share in September 2007, but now it has less than 80 cents left. In the past three years, Fannie and Freddie's share price has shrunk by 99%, which is enough to make every investor feel extremely depressed.           
Some analysts say that the delisting of Fannie and Freddie is inevitable. Standard & Poor's maintained its one-year target price of $1.5 as Fannie and Freddie were able to trade off the market after delisting. S& P analysts said they judged that the U.S. government would continue to provide financial support for Fannie and Freddie.