This is getting ridiculous.
On top of a record $29bn quarterly loss (and the tacit admission that it will continue to report losses for the forseeable future), and buried on page 218 is this little gem in Fannie Mae’s 10-Q filing with the SEC:
Treasury’s funding commitment may not be sufficient to keep us in a solvent condition
Say what? This is what:
Under the senior preferred stock purchase agreement, Treasury has made a commitment to provide up to $100 billion in funding as needed to help us maintain a positive net worth. To the extent we draw under the funding commitment in the future, the amount of Treasury’s funding commitment will be reduced by that amount. If we continue to experience substantial losses in future periods or to the extent that we experience a liquidity crisis that prevents us from accessing the unsecured debt markets, this commitment may not be sufficient to keep us in solvent condition or from being placed into receivership.
That’s right - Fannie Mae’s taken a page from AIG’s playbook. One massive bailout - and $100bn - may not have been enough to set the mortgage lender to rights.
But the question is - will anything be?
Related links:
AIG: Not an insurance company - FT Alphaville
AIG gets revised $150bn state bail-out - FT
Fannie Loses $29 Billion in Q3; Alt-A Leads the Way - HousingWire
