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Freddie Mac and Fannie Mae were seized by the
US government in September [Reuters] |
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Fannie Mae, the troubled US mortgage finance giant, has said that the $100bn bailout it received from the US government may not be enough to keep it solvent.
The company issued the warning after posting a $29bn profit loss in its third financial quarter on Monday.
The company said the government's money "may not be sufficient to keep us in solvent condition or from being placed into receivership" in its filing to the US securities and exchange commission.
"If current trends in the housing and financial markets continue or worsen, and we have a significant net loss in the fourth quarter of 2008, we may have a negative net worth as of December 31, 2008," it added.
The loss amounted to $13 per share, compared with a second-quarter loss of $2.3 billion loss, or $2.54 per share.
Housing crisis
Both Fannie Mae and its sister mortgage titan, Freddie Mac, were seized by the US government on September 7 this year in a bid to avert a financial system meltdown from a credit crunch and housing slump.
The two government-sponsored but shareholder-owned enterprises underpin about half of the US home-loans market.
Both have been hit hard by the nation's slumping housing market - a crisis sparked by the sub-prime loans scandal, when people were granted mortgages they found they were unable to pay.
The US congress created Fannie in 1938 and Freddie in 1970 to keep money flowing into the home loan market by buying up mortgages and bundling them into securities for sale to investors worldwide - thereby making home ownership affordable for low- and middle-income Americans.
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Al Jazeera and agencies
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Feedback |
Number of comments : 3 |
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James
Canada |
11/11/2008 |
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We hope Iraq was a real thrill for bush |
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Julius Caesar was assassinated because he insisted on extending Rome's far-flung military aggression. His colleagues killed him because his recklessness endangered the security of the state.
This was pointed out many times when bush wanted so much to show his daddy that he could destroy Iraq. Not only did the American intelligentsia warn him, but so did bin Laden, who said bush's perverse sociopathy in Iraq would "bleed America dry". |
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Chros Hardin
United States |
13/11/2008 |
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Financial Crisis |
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Several years ago Congress passed a series of bills that loosened bank rules. And the Federal Reserve [the United States treasury], under this pressure, allowed banks to do things that heretofore they were not allowed to do. Want to blame someone? Blame your Congressman. He voted for the lax rules that allowed banks to get themselves in the situation. It's time for banks to go back to the investment rules of 15 years ago. |
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Paul C
United States |
14/11/2008 |
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Pass the pity |
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I won't give GW Bush any credit at all for the meltdown in financials, and I'll even agree with those who say the Pres is diametrically opposed to the raft of bailouts and cash support for businesses. GWB just has no record of getting his hands dirty with this sort of thing. I more agree with Chros, above. Deregulation of banking and insipid, clueless CEOs in about 10 industries made sure that no one has a safety net. Governments are running out of money to 'churn and burn', quickly now. |
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