The Freddie/Fannie Delisting

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, finally pushed the two firms out of the New York Stock Exchange. Neither Freddie nor Fannie could meet the exchange's listing requirements, and have not for a long time. Today's Washington Post story provides the bare bones details of Freddie and Fannie's ouster from the NYSE, and notes their new home will be the OTC market.

Two years ago, Freddie's equity price per share was in the fifties. "Implied" Federal government backing gave its bonds nearly the same low-risk profile as US Treasurys. Well, times have certainly changed. Fannie and Freddie are kaput; financing for the housing market is in tatters; foreclosure ads now frequent after-midnight cable TV programs; sovereign funds and foreign institutions wonder about the credit worthiness of US government issued financial instruments.

The housing scandals, even with today's Federal indictment of Len Farkas of the disastrously failed Colonial Bank, remain largely unaddressed. Moving Freddie and Fannie out of the NYSE Show and into the relative shadow world of the OTC market reminds us that something very important was abused in this Great Recession: we've trashed our own sense of "full faith and credit" in our financial institutions and our government. We don't know how to restore them to their formerly assuring aura. The most troubling thought of all is that we may never know how.