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.