While Fannie Mae has already received billions from the government, it is likely to need at least another $1- billion after posting its fourth-quarter results, Credit Suisse analyst Moshe Orenbuch writes in a research note.
“Freddie Mac disclosed late Friday it is likely to need up to $35 billion in federal support, on top of $13.8 billion it received last year,” the Associated Press reports.
From the AP (via Forbes):
Fannie Mae’s net worth – the value of its assets minus the value of its liabilities – fell to $9.4 billion at the end of September down from $44.1 billion at the end of last year. If that number turns negative, Fannie Mae would be forced to obtain funding from the Treasury Department.
“It would appear that Fannie would need about $10 billion from its Treasury line under these conditions,” Orenbuch wrote.
Analysts also expect that legislation allowing bankruptcy judges to reduce the interest rate or principal balance of home loans will reduce the value of mortgage securities held by Fannie and Freddie. Such legislation, Orenbuch said, is likely to lead to an additional $20 billion in taxpayer aid for both companies.
Can we just say something here? Any company that received a bailout because it was facing financial weakness is going to need more money. We’re far from through this thing, lads and lasses.