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Written by admin on December 20th, 2008

An Additional $13.8 Billion Requested By Freddie Mac After Serious Losses

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As of November 14, Freddie Mac, the mortgage-lending giant taken over by the federal government only two months ago, requested an additional $13.8 billion from the US Treasury. The move was an effort to stabilize the company after it suffered record quarterly losses. The amount was authorized and the company will begin receiving the infusion by the November 29.

At the end of the third quarter, Freddie Mac’s net worth was at negative $13.7 billion. As a consequence of dealing with tax asset write offs and shoring up bad mortgages and securities, the net losses widened to $25.3 billion.

This request by the mortgage financing company will lay additional burden on the U.S. government even as they are struggling to avert further financial disaster. Only a few months ago, both Freddie Mac and the larger Fannie Mae were given $100 billion each as the government stepped in.

Newly appointed CEO of Freddie Mac, David Moffett, assumed control of the company back in September and immediately went to work dealing with deferred tax credits and providing additional write-downs for bad mortgages and securities.

Fannie Mae CEO, Herbert Allison, put the same measures into practice this week; the resulting losses for the company were in the neighborhood of $29 billion.

Some financial figures for Freddie Mac included $19.44 a share in quarterly losses. Furthermore, Freddie’s deferred tax assets were wrote down by $14.3 billion. With many other companies, the way they increase tax credits is by accounting for growing losses and then keeping them as assets until they can be re-established as profits.

Freddie Mac obtained a special provision for credit losses totaling $5.7 billion. This number was up more than half from a second quarter amount of about $2.5 billion. As far as total credit expenses were rated, including any provision for future losses, at $6 billion.

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