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Freddie Mac/Restatement Annual Results For Last 3 Yrs
Dow Jones Newswires
| 03-25-03
| Jenny Park
Posted on 03/25/2003 6:25:58 AM PST by Starwind
Freddie Mac/Restatement -2: Annual Results For Last 3 Yrs
MCLEAN, Va. (Dow Jones)--Freddie Mac (FRE) expects to complete its restatement process for the last three years by the end of the second quarter, with results released shortly thereafter.
The company still expects the likely cumulative effect to be to materially increase reported earnings for prior periods. In addition, Freddie Mac expects significant volatility in reported quarterly earnings for those periods.
In a press release Tuesday, the mortgage-finance company said the restatements cover 2002, 2001 and 2000 annual financial results and quarterly financial results for 2002 and 2001.
Freddie Mac will provide a further update on the restatement process, which is "progressing well," in late April.
In order to report first-quarter 2003 results on a consistent basis with restated prior periods, Freddie Mac will delay release of its first-quarter earnings until after completion of the restatement process.
Freddie Mac will publish other information about the corporation's first-quarter 2003 business performance in late April. The information will include business volume as well as credit and interest-rate risk management results.
Freddie Mac noted that its business strategies, low risk profile and economics are unaffected by the restatements.
In January, Freddie Mac said it planned to restate financial results for 2002, 2001 and possibly 2000 due to certain accounting issues involving the hedge accounting treatment of some transactions, including those under FAS 133.
New York Stock Exchange-listed shares of Freddie Mac closed Monday at $54.35, down $1.26, or 2.3%.
-Jenny Park; Dow Jones Newswires; 201-938-5388 .
(END) Dow Jones Newswires
03-25-03 0917ET- - 09 17 AM EST 03-25-03
TOPICS: Business/Economy
KEYWORDS: derivatives
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In January, Freddie Mac said it planned to restate financial results for 2002, 2001 and possibly 2000 due to certain accounting issues involving the hedge accounting treatment of some transactions, including those under FAS 133. I missed this announcement in January.
This restatement would seem to affect FMAC accounting for derivative-related transactions, though not substantially they assure us. I wonder what's up.
1
posted on
03/25/2003 6:25:58 AM PST
by
Starwind
To: AdamSelene235; arete; Cicero; Fractal Trader; gabby hayes; Matchett-PI; Moonman62; OwenKellogg; ...
fyi...
2
posted on
03/25/2003 6:27:35 AM PST
by
Starwind
To: Positive; sourcery; Dec31,1999; ido_now; AntiGuv; Stay the course; arete; rohry; ...
I truly wonder where this all will end. Are there exact records to support their positions?
Free Republic Stock Market/Economy Discussion List. Freep Mail me if you want on or off this list.
3
posted on
03/25/2003 6:51:58 AM PST
by
Fractal Trader
(Free Republic Energized - - The power of Intelligence on the Internet!)
To: Fractal Trader
Bump for discussion
To: Sam's Army
sounds like a plan show me the records
5
posted on
03/25/2003 7:18:10 AM PST
by
Fractal Trader
(Free Republic Energized - - The power of Intelligence on the Internet!)
To: Starwind
"I missed this announcement in January."Likewise. If this is the application of the slow leak theory as perfected by Clinton and company, and if those who have been predicting doomsday scenarios based on derivatives and the GSE's are even remotely close to the truth, this could be the initial trigger of what could become an unfolding financial apocalypse ending in world-wide depression. Even if it's not, any possible leak in this dike has the potential to escalate into a major flood.
To: WaveThatFlag; B. A. Conservative
WavethatFlag, apologies if my memory is wrong, but weren't you associated with either FMAC or FMAE for awhile (and were confident of their derivatives), and if so, were you aware of these restatements coming down the pike?
Do you know anything about this?
7
posted on
03/25/2003 7:33:58 AM PST
by
Starwind
To: B. A. Conservative
"this could be the initial trigger of what could become an unfolding financial apocalypse ending in world-wide depression."
Guess who'll get the blame if that happens.....
To: Starwind
Yes, this is more fearmongering. The average American hears the word "derivatives" and he starts to panic. "Derivatives," in the Freddiemac sense means "Mortgage Back Securities," which may see some price fluctuation due to shifts in interest rates, but whose principal is AAA rated. FNMA and FHLMC securitize loans that conform to a stingent set of guidelines. Since they hold most of the MBS they buy to maturity, the only real risk we are talking about is reinvestment risk.
To: WaveThatFlag
Yes, this is more fearmongering. DJNS is simply reporting a FMAC press release it seems.
My question was did know about the restatement as announced in January, and if so I was going to ask if you might also know a link to greater information from the January announcement.
10
posted on
03/25/2003 8:00:02 AM PST
by
Starwind
To: Starwind
Sorry, no links.
To: WaveThatFlag; Starwind
The average American hears the word "derivatives" and he starts to panic. "Derivatives," in the Freddiemac sense means "Mortgage Back Securities," which may see some price fluctuation due to shifts in interest rates, but whose principal is AAA rated. I think a greater concern is the extreme leverage of the GSEs (60 to 1). Also its perfectly reasonable to ask if it is possible to provide a market with *too much* liquidity. The GSE's draw in funds from every corner of the earth and dump them into our housing market. Why is this not considered inflationary? Sure, the assumption of a government bailout allows them to offer rates a wee bit lower than other organizations but the more dollars you throw at an asset the more expensive it will become (college tuition is another good example). The GSE's will tell you that home ownership is at an all time high, but this is nonsense: Home indebtness, not ownership, is at an all time high.
I believe this is the entire point. As GSEs inflate home values they force Americans to take on increasing levels of debt which allows them greater access to the income streams of ordinary Americans. Its a positive feedback loop, the financial equivalent of holding a microphone too close to a speaker: Eventually the system runs out of gain. When this occurs the cycle will reverse to destroy wealth even faster than it created it. We've had years of recession now with no real dip in consumer spending. How is this possible without the localized home inflation created by the GSE money pumps?
Since they hold most of the MBS they buy to maturity, the only real risk we are talking about is reinvestment risk.
And credit risk.
12
posted on
03/25/2003 9:06:23 AM PST
by
AdamSelene235
(Like all the jolly good fellows, I drink my whiskey clear.)
To: WaveThatFlag
Because the GSE's are so highly leveraged, isn't an increase in the default rate a real risk? Couldn't an argument be made that because lenders offload the risk to the GSE's that lending standards are more lax? Haven't we, in fact, seen that lending standards are more lax? If we were to suffer a sharp downturn in the economy, given how extended homeowners and consumers are, couldn't we expect an unusually high default rate?
13
posted on
03/25/2003 9:09:38 AM PST
by
Soren
To: Starwind
How does your portfolio look..here's my mom's:
Symbol |
Last Trade |
Change |
Related Information |
52-wk Range |
Shrs |
Paid |
Mkt Cap |
Gain |
^DJI |
12:26pm |
8,302.78 |
+88.10 |
+1.07% |
Chart, Components, more... |
7,197.49 - 10,502.61 |
1 |
10,324.07 |
N/A |
-$2,021.29 |
-19.58% |
^IXIC |
12:26pm |
1,392.94 |
+23.16 |
+1.69% |
Chart, more... |
1,108.49 - 1,865.37 |
2 |
4,526.49 |
N/A |
-$6,267.10 |
-69.23% |
^GSPC |
12:26pm |
876.24 |
+12.01 |
+1.39% |
Chart, Components, more... |
768.58 - 1,154.40 |
5 |
1,365.88 |
N/A |
-$2,448.20 |
-35.85% |
^IIX |
12:26pm |
88.61 |
+2.05 |
+2.37% |
Chart, Components, more... |
57.03 - 125.66 |
- |
- |
N/A |
- |
- |
JDSU |
12:11pm |
2.898 |
+0.068 |
+2.40% |
Chart, Messages, Profile, more... |
1.58 - 6.20 |
100 |
104.25 |
4.102B |
-$10,135.20 |
-97.22% |
NT |
12:06pm |
2.16 |
+0.05 |
+2.37% |
Chart, Messages, Profile, more... |
0.43 - 4.73 |
200 |
60.5 |
8.318B |
-$11,668.00 |
-96.43% |
MSFT |
12:11pm |
25.49 |
+0.20 |
+0.79% |
Chart, Messages, Profile, more... |
20.705 - 30.46 |
1,000 |
45 |
272.8B |
-$19,510.00 |
-43.36% |
SUNW |
12:11pm |
3.598 |
+0.148 |
+4.29% |
Chart, Messages, Profile, more... |
2.34 - 9.55 |
1,000 |
3.28 |
11.495B |
$318.00 |
+9.70% |
ORCL |
12:11pm |
11.32 |
+0.29 |
+2.63% |
Chart, Messages, Profile, more... |
7.251 - 13.36 |
- |
- |
59.351B |
- |
- |
VYTL |
No such ticker symbol. Try Symbol Lookup (Look up: VYTL) |
INDXF.PK |
Mar 24 |
0.27 |
0.00 |
0.00% |
Chart, more... |
0.00 - 0.00 |
1,000 |
.4 |
N/A |
-$130.00 |
-32.50% |
EQR |
12:06pm |
24.50 |
+0.26 |
+1.07% |
Chart, Messages, Profile, more... |
21.55 - 30.96 |
1 |
24.25 |
6.656B |
$0.25 |
+1.03% |
EOP |
12:06pm |
25.79 |
+0.27 |
+1.06% |
Chart, Messages, Profile, more... |
22.78 - 31.36 |
150 |
23.94 |
10.605B |
$277.50 |
+7.73% |
DSU |
12:05pm |
5.97 |
-0.02 |
-0.33% |
Chart, more... |
4.45 - 6.94 |
600 |
6.16 |
N/A |
-$114.00 |
-3.08% |
GIM |
12:00pm |
7.55 |
-0.04 |
-0.53% |
Chart, Messages, Profile, more... |
6.35 - 8.15 |
500 |
7.68 |
977.8M |
-$65.00 |
-1.69% |
|
-$51,763.04 |
-47.68% |
|
|
|
Set Alert - Create Transaction History - Portfolio Email |
Download Spreadsheet |
Select a Symbol for a detailed quote. Quotes delayed 15 minutes for Nasdaq, 20 minutes for NYSE and AMEX. For |
14
posted on
03/25/2003 9:30:01 AM PST
by
Fractal Trader
(Free Republic Energized - - The power of Intelligence on the Internet!)
To: Fractal Trader
hmm...almost all tides are rising : - )
15
posted on
03/25/2003 9:31:02 AM PST
by
Fractal Trader
(Free Republic Energized - - The power of Intelligence on the Internet!)
To: WaveThatFlag
Where is this from: ...
they hold most of the MBS they buy to maturity, the only real risk we are talking about is reinvestment risk. In the early 90's the roll over of portfolios was running at 25% for 3yrs running. I would suspect it to be higher in 02.
However, more important is the yield or return on their portfolio and with decreasing interest rates and roll overs, that will certainly decrease. I would also be curious to see their expenses and see how that decreases their net return to investors. Has this not been available in the past ?
16
posted on
03/25/2003 9:34:57 AM PST
by
imawit
To: AdamSelene235
My head hurts.
To: imawit
However, more important is the yield or return on their portfolio and with decreasing interest rates and roll overs, that will certainly decrease. I would also be curious to see their expenses and see how that decreases their net return to investors. Has this not been available in the past ? Who say interest rates will be decreasing?
To: Fractal Trader
How does your portfolio look..here's my mom's: I think I mentioned on another thread, I'm 100% cash for now and have been for some time.
Mom looks a bit underwater....
19
posted on
03/25/2003 9:43:06 AM PST
by
Starwind
To: WaveThatFlag
My head hurts. BTW,I closed out my short positions last week and am looking for another FNM shorting opportunity.
I should be trying talk FNM up not down at the moment.
20
posted on
03/25/2003 9:49:11 AM PST
by
AdamSelene235
(Like all the jolly good fellows, I drink my whiskey clear.)
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