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Freddie Mac Loses $2B, Seeks Cash

Posted Nov 20, 07 8:51 AM CST in Business 

(Newser) – Freddie Mac, the second-largest US mortgage lender, lost $2.02 billion this quarter, its worst quarter ever, the company said this morning. With core capital almost below its regulatory minimum, the company is looking for fast cash, hiring Goldman Sachs and Lehman Brothers to help bail it out, and “seriously considering” slashing its dividend by 50%. Shares fell 7% in pre-market trading.

Freddie Mac’s capital minimum is more stringent than most; regulators upped it 30% after Mac reported big accounting mistakes in 2003, understating results by $5 billion. This quarter, losses amounted to $3.29 a share, vastly eclipsing the $0.22 loss analysts predicted. Fellow lender Fannie Mae meanwhile reported a $1.39 billion loss. Together, Mae and Mac own or guarantee 40% of US mortgages.

Sources Bloomberg, Wall Street Journal

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Freddie Mac reported over $2 billion in losses for the third quarter.   (Getty Images)
A house is for sale Friday, June 1, 2007 in Oldwick, N.J. Mortgage giant Freddie Mac reported huge losses today. (AP Photo/Mark Lennihan)   (Associated Press)
Richard Syron, chairman and CEO of Freddie Mac, talks about the sub-prime lending crisis and its effect on the housing market during an address entitled "Strategies to Keep People in Their Homes" at the...   (Associated Press)
Richard Syron, chairman and CEO of Freddie Mac, answers a reporter's question before talking about the sub-prime lending crisis and its effect on the housing market during an address entitled "Strategies...   (Associated Press)
NY Attorney General Andrew Cuomo speaks to the media at his office, Wednesday, Nov.7, 2007, in New York. Cuomo announced that his office has sent Letters of Notice and Demand including subpoenas and demand...   (Associated Press)
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Financial Crisis • credit crisis • subprime crisis • subprime mortgages • Fannie Mae • Freddie Mac


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