The day of reckoning is coming for both Fannie Mae (FNM) and Freddie Mac (FRE). The first time delisting of these companies was discussed, on September 8, 2008, the NYSE notified FNM and FRE that they'd have to increase their share price over a dollar or the stocks would be delisted from the exchange after six months. The two previous times that the stocks fell below $1 the government was able to bring them back above the minimum.
While being delisted isn't the end of the world for most companies, these government entities rely on the confidence of the markets to move forward after being seized. If the government has plans for the structured reorganization of mortgages in conjunction with the latest bailout package then being delisted would be a final nail in the failed bailout coffin.
Look for a boosting of the share price to ridiculous levels (anything above $1) or go literally to zero in the next delisting notification process. I believe that the prospect of delisting is going to wipe out these companies and possibly the banking system. Touc.
Sources:
Spicer, Jonathan. "Fannie, Freddie Facing Delisting Threat." Thomas Reuters. September 8, 2008. Accessed February 21, 2009.
