This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Wall Street Whispers: Pink-Sheet Politics

"We probably will get a slightly altered version of the status quo," said Schnare. "And that won't help the American populace very much."

The reason, according to various sources, is that the government needs Fannie and Freddie too much to let them go. The two entities now control a wide majority of the U.S. mortgage market, keep rates low to foster a housing recovery and since the government has stood behind the GSEs so far, the impact of stepping away could be more dire than mortgages.

"If the government in any way stunned investors in GSE debt, it would halt their ability to sell Treasury debt," noted Ely.

Still, at some point, the government has to let everyone know what's going on with Fannie and Freddie. It's likely, as Schnare suggested, that not a whole lot will change -- Treasury Secretary Tim Geithner indicated that the government will remain involved in the mortgage market, but simply change its GSE guarantee to an explicit one. But if not much is changing, what's taking so long to say so?

Meanwhile, Fannie and Freddie's essentially worthless shares had been bouncing around on the New York Stock Exchange, where speculative traders have had a field day. Instead of coming up with a comprehensive plan for Fannie and Freddie, their regulator, the Federal Housing Finance Agency, recently placed the two stocks -- which had long been threatened for disqualification by the NYSE -- on the pink sheets. They now trade as FNMAS.OB and FMCC.OB rather than FNM and FRE.

-- Written by Lauren Tara LaCapra in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CS $27.66 2.71%
NLY $10.44 0.38%
YHOO $44.13 -0.69%
AAPL $124.25 -0.14%
FB $81.66 -0.67%

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs