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Nothing to See Here, Bagholders



March 11, 2009 – Comments (4)

Freddie Mac Seeks $30.8B in U.S. Aid After 4Q Loss- AP

Freddie Mac is asking the government for $30.8 billion in aid after posting a gargantuan loss of more than $50 billion last year as the U.S. housing market worsened.

Just open up and say, "Warrrrgarble."

4 Comments – Post Your Own

#1) On March 11, 2009 at 5:36 PM, TMFBent (99.17) wrote:

This tidbit is interesting: The recent loss was driven by $13.2 billion in hedged trades, $7.2 billion in credit losses from the declining housing market conditions and $7.5 billion in writedowns of the value of its mortgage-backed securities. The company also took a charge of $8.3 billion for now-worthless tax credits.

If you recall, the delusionary conmen at Fannie and Freddie were, last fall, claiming that these tax credits counted as capital! "Yeah, well hey, we know you're looking for a certain amount of real capital to backstop our enormous leverage, so why not count these IOUs from the government?"

Now we know why not. They're junk.

Here's a " target="_self">Bloomberg article last fall criticizing this fiction. A snippet:

 ``We concluded that the capital of these institutions was too low relative to their exposure,'' Fisher said in response to an audience question after a speech in Austin, Texas. Further, ``that capital in and of itself was of low quality.''

Fannie counted $20.6 billion in so-called deferred tax credits toward its $47 billion of regulatory capital as of June 30, according to company disclosures. Freddie applied $18.4 billion in deferred-tax assets toward its $37.1 billion in regulatory capital in the second quarter.

In other words, back then, a full half of its regulatory capital was tax "assets," and roughly half of this (or a quarter of the original total" are now admitted to be worthless.

Congrats, bagholders. This sack somehow just got emptier.

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#2) On March 11, 2009 at 5:44 PM, jesusfreakinco (28.19) wrote:

It will be interesting to see when the Congress draws the line.  Who will be the next Lehman and what will be the implications?

Obama and Timmy have their hands full.  Sucks to be them.


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#3) On March 11, 2009 at 6:49 PM, QualityPicks (79.32) wrote:

Just "GET OVER IT!" and hand the money to them. These guys worked overtime and weekends to accumulate all these loses. Jamie Dimon is sick and tired of people like you. /sarcasm

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#4) On March 11, 2009 at 6:50 PM, dbhealy (31.42) wrote:

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