WASHINGTON – Mortgage giant Fannie Mae yesterday reported another big third quarter loss of $7.6 billion, which it said will necessitate additional taxpayer assistance of $7.8 billion.
The third quarter loss includes $2.5 billion in preferred stock dividends the company – which has been under federal control since September 2008 – paid to the federal government.
The company’s third quarter loss was driven primarily by two factors: $4.9 billion in credit-related expenses, the substantial majority of which were related to its legacy (pre-2009) book of business; and $4.5 billion in fair value losses driven primarily by losses on risk management derivatives due to a significant decline in swap interest rates during the quarter. The decline in interest rates during the third quarter had a significant impact on the company’s derivative losses.
Last week, Freddie Mac also posted a wider third quarter loss as derivatives losses increased and the weak housing market weighed on results. The company also requested an additional $6 billion in federal aid, bringing the total amount of government aid it has requested to more than $70 billion since the financial crisis began.
Fannie has received $112.6 billion so far from the Treasury Department — the most expensive bailout of a single company. Freddie Mac has drawn $72.2 billion in taxpayer bailout funds so far.
