Fannie Mae and Freddie Mac report huge losses
From the Wall Street Journal:
Fannie Mae reported a staggering $72 billion net loss for 2009, underscoring the challenges that still face the nation’s largest mortgage financier and offering more grim news for taxpayers who may ultimately pick up the bill…
Freddie Mac posted a fourth-quarter net loss of $6.5 billion, didn’t ask for more bailout cash and posted a $21.6 billion loss for 2009, down by more than half from a year earlier…
The housing market has shown signs of stabilizing in recent months, but Fannie said that unemployment and continued defaults from many borrowers who owe more on their mortgages than their homes are worth meant that losses would continue through 2010, though at lower levels…
The government took over Fannie and Freddie nearly 18 months ago as rising loan defaults burned big holes in the companies’ balance sheets. The government has agreed to absorb unlimited losses for the next three years and up to $400 billion after that…
Editor’s note: The government and lending institutions have been forestalling the reporting of bad debt for housing and commercial real estate loans. If the trillions of dollars in bad loans were candidly recognized, the financial institutions would topple and the nation and likely most of the world would enter another great depression.
That it will take several years at this rate of write offs to recognize most of these losses will be a major detriment to the loosening of credit and the recovery of the economy.
Click here to read the full WSJ article.
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