Citigroup Inc. said in a filing with the Securities and Exchange Commission Wednesday that its net exposure to Fannie Mae and Freddie Mac preferred shares had fallen 95%, to about $50 million, from the end of June to Monday as a result of sales, hedges and writedowns.
It said the holdings had resulted in a $450 million quarter-to-date hit but that the final impact for the period could be different.
Brian Moynihan, the president of Bank of America Corp.’s global corporate and investment bank, said Wednesday at an investor conference that his company will also take a mark-to-market hit on its GSE exposure this quarter. He did not say how big the hit would be.
Wachovia Corp. said Tuesday it had liquidated its $509 million of government-sponsored enterprise preferred stock at a pretax loss of $171 million.
The sales were completed on July 21 - more than a month before the government takeover of Fannie Mae and Freddie Mac - and were part of the Charlotte company's effort to reduce leverage on its balance sheet, Wachovia said.
It did not say whether the preferred shares were in Fannie, Freddie, or both GSEs. Several other banking companies have disclosed financial hits on GSE preferred stock since the seizure of Fannie and Freddie was announced Sunday.
Wachovia also said Tuesday it had sold about $1.3 billion of auction-rate securities that it had repurchased under settlements with regulators. When it announced the settlements in August, the $812.4 billion-asset Wachovia estimated that about $8.5 billion of the bonds were eligible for repurchase and that after redemptions and planned sales it would hold about $3.1 billion of them at June 30 next of year.
It had previously set aside $500 million to cover legal expenses and estimated market losses associated with the auction-rate securities. At the time it said it planned to set aside another $275 million.