Fannie Mae posts Gi-normous loss, says worst housing slump since Depression is getting even worse...

[marmar]

from Bloomberg:



Fannie Mae Posts Fourth Straight Loss, Cuts Dividend (Update1)

By Dawn Kopecki

Aug. 8 (Bloomberg) -- Fannie Mae, the largest U.S. mortgage- finance company, sliced its dividend after posting a fourth straight quarterly loss and said the worst housing slump since the Great Depression is deepening.

Fannie slumped 12 percent in early New York Stock Exchange trading after reporting a second-quarter loss of $2.51 a share, compared with the 72-cent average estimate of 10 analysts in a Bloomberg survey. The common-stock dividend will be cut to 5 cents from 25 cents a share, Washington-based Fannie said today.

Fannie's results come two days after Freddie surprised investors with a loss that was three times wider than analysts anticipated. Fannie's credit-related expenses rose 66 percent to $5.3 billion and Chief Executive Officer Daniel Mudd said the company anticipates a ``significant'' increase in credit loss reserves through 2008.

``Neither of these companies have properly provisioned for what we're heading into,'' said Paul Miller, an analyst at Friedman, Billings, Ramsey & Co. in Arlington, Virginia, who has an ``underperform'' rating on both companies. ``This thing is going to get worse and last longer and deeper than they originally thought.''

Fannie and Freddie plunged more than 80 percent in New York trading this year on concern they may not have enough capital to withstand record foreclosures on the $5.2 trillion of mortgages they own and guarantee. Freddie's loss increased speculation that U.S. Treasury Secretary Henry Paulson may use his new powers to pump capital into one or both companies.

Both companies will need to raise as much as $15 billion, Miller said.

Net Loss

Fannie's net loss was $2.3 billion, or $2.54 a share, compared with net income of $1.95 billion, or $1.88 a share, in the same quarter a year ago.

Mudd, 49, has raised $14.4 billion since late last year, though still failed to quell concerns that the company is short of capital. As worries escalated, he dispatched executives to Asia to calm investors.

``Volatility and disruptions in the capital markets became even more pronounced in July,'' Mudd said in the statement. ``In addition, credit performance has continued to deteriorate and, based on our experience in July, we anticipate further increases in our combined loss reserves.'' .......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aYPqJhQUd2Wg&refer=home

[TexasObserver]

1. they keep trying to put a band aid on a severed artery

[bluerum]

2. "get worse and last longer and deeper" - there is an echo out there,,,