DOW JONES NEWSWIRES
Mortgage giant Freddie Mac's (FRE) fourth-quarter net loss
widened sharply on surging investment and credit losses, bringing
its loss for the year to $50.1 billion as the company warned that
funding from the U.S. Treasury may not be enough to keep it
solvent.
Still, Freddie's loss narrowed from the third quarter as it also
requested an additional $30.8 billion under the Treasury's Senior
Preferred Stock Purchase Agreement to eliminate its stockholders
deficit. It expects to receive those funds this month.
The Treasury Department boosted its pledge last month to $200
billion each for Freddie and Fannie after they were put under
conservatorship in September to prevent their potential bankruptcy.
Freddie has already gotten $13.8 billion.
For the latest period, Freddie posted a net loss of $23.9
billion, or $7.37 a share, compared with a year-earlier net loss of
$2.5 billion, or $3.97 a share.
The latest results included $13.3 billion in net mark-to-market
losses on the company's derivatives portfolio and $7.2 billion in
credit-related expenses. Results were also hurt by $7.5 billion in
security impairments on available-for-sale securities.
Freddie also recognized an $8.3 billion valuation allowance
against its net deferred tax assets in the period.
The company posted negative revenue of $15.8 billion, compared
with negative $678 million a year earlier.
"Freddie Mac is working hard to serve our expanded mission in
this historic crisis, by doing all we can to help stabilize the
financial markets and hasten the recovery in housing," Moffett
said.
Freddie's red ink comes on top of a $25.2 billion loss reported
by Fannie Mae (FNM) late last month. Both firms have temporarily
halted all foreclosure sales and evictions to give loan servicers
more time to help borrowers avoid foreclosure. Freddie extended its
suspension of eviction notices last week through April 1.
Freddie named John A. Koskinen interim Chief Executive
Wednesday, effective upon the resignation of David Moffett, who
said last week he will resign no later than Friday, as he wants to
return to a role in the financial-services sector. Moffett took
over as CEO in September amid the conservatorship. Before that, he
served as chief financial officer at U.S. Bancorp. (USB).
Freddie also said last month it would begin using third-party
services that specialize in servicing Alt-A and other types of
higher-risk mortgages to advise homeowners in another effort to
keep at-risk borrowers in their homes.
Freddie's shares were up 2.4% at 43 cents in after-hours trading
from the close of 42 cents.A New York Stock Exchange move to lower
minimum market-capitalization requirements and minimum trading
prices for listed companies has kept Freddie's stock from being
delisted for falling below $1, as it warned in November. The shares
have fallen 99% in the last year.
-By Kerry E. Grace and Lauren Pollock, Dow Jones Newswires;
201-938-5089; kerry.grace@dowjones.com