Posted on 11/09/2007 8:53:32 AM PST by Hydroshock
to expect any better is insane! it is nothing more than a sorry giveaway program!! and the people if you can call them people have been accused of stealing in years past and now they are being investigated for taking fixed appraisals from WaMu.
The results also marked a significant milestone for Fannie Mae: They brought the company current in its financial reporting for the first time since 2004, when a massive accounting crisis tarnished its reputation and swept the top executives from office.
“Home prices have declined in the first nine months of 2007, and we expect they will continue to decline for the remainder of 2007 and in 2008. As a result, we expect significant increases in our serious delinquency rates, foreclosure activity, credit losses and credit-related expenses for 2007 compared with 2006, and for 2008 compared with 2007.”
“Excluding the effect of capital transactions, we experienced a $7.0 billion decrease in the estimated fair value of our net assets for the first nine months of 2007. The primary factors affecting the fair value of our net assets for the first nine months of 2007 included the benefit from the economic income generated by our businesses, which was more than offset by a decrease in value resulting from the decline in home prices and wider mortgage-to-debt OAS. “
I stand corrected on the accounting—now we may start to see what the real story is.
Remember Fannie is a $50B company with $1.4T in balanced assets and debt, and already they’re recognizing $7B in losses. It doesn’t take an unthinkable number of defaults to wipe out all shareholder equity.
But no one knows how to value Fannie or what its actual earnings are.
Citi Group is the buy, 5% yield and too big to fail. Januray 2009 sounds about the right time too.
Thanks for finding the wise words of one of our founding fathers. The funny thing that people don’t seem to get is that they wrote our constitution the way they did because THEY had already seen it all and felt there was nothing new under the sun, except perhaps the new order they created. Time will tell if it lasts and if it really turned out to be new.
Ah, its a lot more than that, actually. The expected costs of expected mortgage defaults are already factored in to the cost of borrowing. If they are losing money then it is not just business as usual.
Exactly.
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