Fannie Mae and Freddie Mac’s shares, which once traded above $74, fell yesterday below the critical $1 level, which places them firmly on the watch list of the NYSE Regulation, which oversees the NYSE. NYSE-listed companies whose shares close below $1, on average, over 30 days receive a letter from NYSE Regulation giving them six months to get their shares back above $1.
Fannie and Freddie shares ended the day down more than 89 percent and 82 percent at 73 cents and 88 cents, respectively.
The government takeover includes the U.S. Treasury’s receiving warrants to buy up to 79.9 percent of Fannie’s and Freddie’s common stock, diluting shareholder value. Dividends will be a thing of the past.
Scott Peterson, a spokesman for NYSE Regulation, said, "We're working very closely with the companies and are talking to them on a regular basis, but there are a lot of moving parts right now and we'll see how it all shakes out."
Peterson said some companies may be given an additional six months, but NYSE Regulation always reserves the right to delist stocks at any time "if it's just clear the company isn't going to make it."
Dow Jones announced yesterday that, as of open of trading on Thursday, Fannie and Freddie will be deleted from the Dow Jones Financial Services Titans 30 Index, replaced in the index by credit card network Visa Inc. and Chinatrust Financial Holding Company Ltd.
A "pink sheet" stock is one that is traded over-the-counter because it does not meet the listing requirements of exchanges such as the NYSE, which is operated by NYSE Euronext. The daily listings of OTC stocks were first printed on pink paper.
On Sunday, the U.S. Treasury announced it would take control of Fannie and Freddie, which together back about half of the country's $12 trillion in home mortgages.