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Freddie Mac Posts $6 Billion Loss And Seeks More Aid

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http://www.nytimes.com/2010/08/10/business/10freddie.html?ref=business

The government-controlled mortgage buyer Freddie Mac on Monday asked for $1.8 billion in additional federal aid after posting a larger loss in the second quarter.

Freddie Mac said that it lost $6 billion, or $1.85 a share, in the quarter. The company is required to pay a 10 percent annual dividend to the Treasury Department on money it has received from the government. That made up $1.3 billion of the company’s second-quarter losses.

The company lost $840 million, or 26 cents a share, in the same quarter last year.

The government rescued Freddie Mac and its sibling company, Fannie Mae, from the brink of failure nearly two years ago. The new request means they have needed $148.2 billion to stay afloat, about $63.1 billion of which is being used by Freddie Mac.

Freddie Mac is losing money from bad loans it backed, many of them before the housing market went bust. It had $118 billion in bad loans at the end of June, up from $103.4 billion at the end of last year. It owned more than 62,000 foreclosed properties in June, up from about 35,000 a year earlier.

Both Fannie Mae and Freddie Mac have lost tens of billions of dollars in the last two years and both are asking the government to prop them up. Last week, Fannie Mae requested $1.5 billion after posting a loss of $3.13 billion, or 55 cents a share, in the second quarter.

Still, the two companies are taking different approaches to their situations. Fannie Mae sounded optimistic while Freddie Mac offered a more tempered view.

“We recognize that high unemployment and other factors still pose very real challenges for the housing market,” the chief executive, Charles E. Haldeman Jr., said in a statement. “With that in mind, we continue to focus on the quality of the new business we are adding to our book to be responsible stewards of taxpayer funds.”

Fannie and Freddie own or guarantee about half of all American mortgages, or nearly 31 million home loans worth more than $5 trillion. They buy home loans from lenders, package them into bonds with a guarantee against default and sell them to investors.

During the housing boom, Fannie and Freddie faced political pressure to expand homeownership and competitive pressure from Wall Street to back ever-riskier loans. When the market went bust, defaults and foreclosures piled up and the government had to take them over.

So nearly 20% of the loss is due to the shares the taxpayers have, total genius.

Lets be positive about this at least all the nice bankers have managed to offload most of their crap onto the taxpayer and they are making a profit.

And we have to consider this is a mere $6bn loss during the US recovery think how bad it would be if there wasn't a recovery!

Thank god Bernanke has rescued the global system with his genius.

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This is what QE is for. shoring up busted banks.

Its the ONLY way to remove bad debts from the balance sheets without harming a single banking executive, bonus or pension.

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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