Fannie Mae (FNMA) is one of the highest-volume stocks on the OTCQB with billions in daily trading interest, but its capital structure carries unique regulatory dilution risks that penny traders must understand.
During the 2008 financial crisis, the US government placed Fannie Mae into conservatorship. In exchange for capital support, the Treasury received senior preferred shares with liquidation preference and warrants to purchase 79.9% of FNMA's common stock.
Even though Fannie Mae generates billions in annual net income from guarantee fees, that capital is retained on the balance sheet under the Enterprise Regulatory Capital Framework (ERCF) to build toward a combined $300B+ buffer.
Institutional investors frequently trade the OTC junior preferred series (e.g., FNMAS, FNMAT) rather than the common stock (FNMA) because preferred shares have defined par values ($25 or $50) and liquidation priority in the event of an FHFA recapitalization plan.
Why doesn't FNMA trade on the New York Stock Exchange?
The NYSE delisted Fannie Mae in 2010 when its stock price dropped below the $1.00 minimum bid requirement. It has traded on the OTCQB ever since.