We appreciate a bit of old fashioned hard work, since it often yields valuable results. So we should salute Ed Najarian, a member of the bank analysis team at Merrill Lynch in New York, who has gone to the trouble of ringing up all the large-cap regional banks ML covers to enquire about exposure to Fannie Mae and Freddie Mac.
The results, extracted from a note sent to ML clients on Wednesday:
The gap in the numbers is the thing to focus on. An accompanying note to the (non-) entry for WFC - Wells Fargo - states:
Management would not disclose FRE/FNM exposure; non-marketable bank stock on balance sheet is FHLB and Federal Reserve stock.
Mr Najarian’s colleagues Heather Wolf and Erika Pen landed the rather more extensive task of getting the same information out of all the mid and small-cap banks covered by ML, but they were able to use earnings conference calls and 10-Q filings. In the event they found just two with significant exposure: Westamerica and Sovereign.
Team leader Guy Moszkowski awarded himself the job of calling the money sector banks. Unfortunately, it seems that half the prestigious field of two refused to talk:
Related links
Citi optimism boosts Fannie and Freddie - FT
S&P downgrades Fannie Mae - FT Alphaville
