This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Fannie and Freddie Shares Seesaw Violently

Stocks in this article: FNMA FMCC FMCKJ FNMAS

NEW YORK (TheStreet) -- Fannie Mae  (FNMA) and Freddie Mac  (FMCC) shareholders were ignored by a Senate Banking Committee agreement unveiled mid-morning Tuesday, and they initially appeared to ignore the senators right back, sending shares of the government sponsored entities to multi-year highs.

Starting at about 1:30 pm eastern time, however, the shares begin a precipitous drop. Roughly an hour later--at 2:38 pm, shares of Fannie Mae were down 35% to $3.78, while Freddie Mac shares were at $3.76, down 31.88% on the day. Preferred shares, such as the Fannie Mae "S" series (FNMAS), were also sharply lower, falling 8.54% to $11.25.

Tuesday's announced agreement from Senator Tim Johnson, chairman of the Senate Banking Committee and Mike Crapo, the top Republican on the committee, is to wind down Fannie and Freddie, following the stated goals of President Obama.

That said, no legislation was actually proposed and the likelihood of anything passing is a longshot, argued analysts at Keefe Bruyette & Woods in a note published Tuesday. A more legislative proposal will be released "in the coming days," according to a joint press release from the senators.

Tuesday's press release did not address shareholders in Fannie and Freddie, continuing a practice that the White House has followed with few exceptions since putting the GSEs into conservatorship in 2008.

Shareholders in Fannie and Freddie have filed nearly 20 lawsuits against the U.S. government and have put together a formidable bipartisan lobbying effort that includes former U.S. Solicitor General Ted Olson and consumer activist Ralph Nader, along with several wealthy hedge funds.

One of their allies in the Senate emerged last week in the person of Senator Pat Toomey (R., Pa.), who submitted a question for Jack Lew Friday based on a Thursday Finance Committee hearing with the Treasury Secretary.

"Retirement funds and other investors have all reached out to me to express their concern and even outrage about the unprecedented 'sweep' that takes all of the GSEs profits and gives them to the government,"  Toomey wrote. The Senator added that "the government's actions with respect to the GSEs profits raise serious concerns, including whether these actions lawfully respect the rights and interests of all Americans."

A Treasury spokesman had no immediate response. Government officials typically take a few weeks to respond to questions submitted for the record after a hearing has ended.

As for the announcement by Senators Crapo and Johnson, a Toomey spokeswoman said the Senator "is looking forward to reviewing the details of the agreement as they are released in the coming days."

--Written by Dan Freed in New York

Follow @dan_freed

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

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs