Fannie And Freddie Are Back In The Headlines
And once again it's for all the wrong reasons.
On Monday, District-based Fannie Mae reported a whopping $29 billion loss, bringing it close to triggering a government cash injection.
Fannie's net worth, or the difference between assets and liabilities, tumbled to $9.4 billion as of Sept. 30 from $44.1 billion at Dec. 31. The Washington-based company said Nov. 10 that the number may be negative by the end of the year.
Today Freddie Mac said its third-quarter loss increased more than 20-fold to $25.3 billion, or $19.44 a share in the three months ended Sept. 30, compared to $1.2 billion, or $2.07 a share in the year-ago period.
The US government has set aside $200 billion for capital infusions into the two companies. Under the government's agreement with the companies, the Treasury is required to inject money in any quarter when the companies' liabilities exceed their assets, up to $100 billion for each firm.
As a result of Freddie's loss, the company is $13.8 billion in deficit. The Director of the Federal Housing Finance Agency (FHFA) has therefore today submitted a request to the Treasury for $13.8 billion.
So Freddie is in for the first installment of his promised $100 billion. Undoubtedly, there will be more to follow in subsequent quarters. Fannie, meanwhile, has already said this week it may need more than the $100 billion in funding pledged by the Treasury to stay afloat.
On Monday, District-based Fannie Mae reported a whopping $29 billion loss, bringing it close to triggering a government cash injection.
Fannie's net worth, or the difference between assets and liabilities, tumbled to $9.4 billion as of Sept. 30 from $44.1 billion at Dec. 31. The Washington-based company said Nov. 10 that the number may be negative by the end of the year.
Today Freddie Mac said its third-quarter loss increased more than 20-fold to $25.3 billion, or $19.44 a share in the three months ended Sept. 30, compared to $1.2 billion, or $2.07 a share in the year-ago period.
The US government has set aside $200 billion for capital infusions into the two companies. Under the government's agreement with the companies, the Treasury is required to inject money in any quarter when the companies' liabilities exceed their assets, up to $100 billion for each firm.
As a result of Freddie's loss, the company is $13.8 billion in deficit. The Director of the Federal Housing Finance Agency (FHFA) has therefore today submitted a request to the Treasury for $13.8 billion.
So Freddie is in for the first installment of his promised $100 billion. Undoubtedly, there will be more to follow in subsequent quarters. Fannie, meanwhile, has already said this week it may need more than the $100 billion in funding pledged by the Treasury to stay afloat.
