Fannie: From Bad To Worse

More writedowns!

WSJ: Fannie Mae‘s third-quarter net loss widened on a $21.4 billion write-down of deferred tax assets it would have used to offset taxes on future profits, showing the red ink at the government-sponsored provider of funds for home mortgages isn’t expected to end soon.

The company announced two weeks ago it might write-down most, if not all, of its deferred tax assets. They are supposed to be written down if a company believes it won’t be able to generate enough taxable profit soon enough to use all those credits before they expire and become worthless.

Fannie posted a net loss of $29 billion, or $13 a share, compared with a prior-year net loss of $1.4 billion, or $1.56 a share. Besides the tax-asset write-down, the latest quarter was also hurt by investment losses and increased credit costs.

Net revenue jumped 53% to $4.06 billion as net interest income more than doubled and guaranty-fee income rose 20%.

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