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Who's Profiting From Fannie and Freddie?

Taxpayers, of course, have lost even more .

Since becoming government wards, Fannie and Freddie's stock prices have been extremely volatile , even if their combined market value never surpassed a few billion dollars. Fannie has ranged from a low of 30 cents in 2008, to a high of $2.13. Freddie has ranged from 25 cents to $2.98.

That type of volatility is where speculative traders roam.

Hedge fund manager Bill Ackman probably did well shorting the stocks in July 2008 as shares of Fannie and Freddie each fell roughly 85% over the next two months. Analysts pointed to the hedge fund world again as an explanation for why the stocks soared during the summer of 2009, when a zombie-stock frenzy sent the two firms flying, along with AIG (AIG - Get Report), only to see them fall again . Some have suggested that options or other derivatives plays fueled the surge, while short sellers reaped gains by driving prices back down.

Essentially, players the government often points to as culprits of misdeeds have benefited from Fannie and Freddie's demise. Meanwhile, California retirees, whose CalPERS pension fund still holds 6.2 million shares of the two firms, have merely watched them bounce around like ping-pong balls. Taxpayers are left looking at a $145 billion bailout which only continues to grow, without a definitive exit plan.

Delisting common and preferred shares of Fannie and Freddie is only placing the ping-pong tourney onto a new table; after all, the OTC bulletin board is where speculators thrive. It certainly won't provide the comprehensive solution that is sorely needed for taxpayers, investors and the mortgage-finance system, but is noticeably absent from President Obama's reform agenda .

The FHFA announced its directive Wednesday morning. By the afternoon, Freddie shares were down 38% at 76 cents, but had recovered from the day's low of 52 cents. Fannie was down 41% at 55 cents, paring earlier losses from 40.5 cents. The trouncing occurred on heavier volume than the two stocks have seen in weeks.

-- Written by Lauren Tara LaCapra in New York.

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