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Too Connected To Fail?

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Today's Wall Street Journal editoral page asks. "So what happens when a company that hasn't filed a financial statement in a year and a half announces yesterday yet more accounting problems and puts off reporting any results until sometime in 2007?"
The answer?

"Its stock goes up 3% and its bonds rally too. At least, that's what happens if the company is Fannie Mae and everyone believes it is Uncle Sam that will be left holding the bag if the mortgage giant blows up. Not only has Fannie's stock remained remarkably buoyant through its epic accounting fiascoes, but earlier this year the New York Stock Exchange amended its rules on delisting, effectively giving Fannie Mae a get-out-of-jail-free card."

The Fannie Exception [The Wall Street Journal]