Now Freddie has joined the loss chorus:
Freddie Mac reported a loss of $2.45 billion for the fourth quarter amid a continuing surge in home-mortgage defaults.
The government-sponsored mortgage investor also warned of a further jump in losses stemming from those defaults this year and next as more borrowers fall behind and home prices fall in much of the country. But Buddy Piszel, chief financial officer, said in an interview that Freddie doesn't expect to need to raise capital again this year unless conditions get "dramatically worse." The company raised $6 billion late last year through a sale of preferred stock.
So of course -- let's expand their ability to take on bad loans.
Bottom line -- Freddie and Fannie are quasi-public entities. If they have deepening problems they will eventually come to the US Congress for money -- which Congress will be forced to give for purely political reasons. Don't be surprised if that eventually happens.
4 comments:
Bonddad:
You have a typo in that last line. Instead of "Don't be surprised if that eventually happens" should read "Don't be surprised when that eventually happens" (snark).
The government bailout is coming, and it will be made on multiple fronts.
Great, now at least we can use the QUANGOs to take over the failed banks. No more talk about how it's "socialism". They're not governmental entitites - only quasi-governmental entities. Can't you see the difference. It's time to nationalize the goddamned banks who failed and now come looking for the public to buy their crappy assets. Do it now before they sell off any of the decent assets they still have remaining on the books.
Also, what do we know about the securities that the Fed has been buying from the banks at its TAF auctions? Who do you think is going to have to eat the writedowns on that pile of garbage?
calculated risk has a pertinent comment via nouriel roubini's text of his testimony to congress earlier this week; it's deep into this long detailed very clear exposition re the crisis
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