Third quarter loss at Freddie Mac, pillar of the US mortgage market – $25.3bn (or $19.44 a share)
GDP of Jamaica in 2007 – $20.5bn
Knowing the US government will bail you out no matter how much money you lose – Priceless
The whopping Q3 loss compares with a net loss of a $1.2bn in the same period a year ago. Analysts polled by Thomson Reuters had expected a per-share loss of 89 cents. Talk about not managing expectations.
Lowlights from the statement, emphasis FT Alphaville’s:
Third-quarter results were driven primarily by a non-cash charge of $14.3 billion related to the establishment of a partial valuation allowance against the company’s deferred tax assets, $9.1 billion in security impairments on available-for-sale securities and $6.0 billion in credit-related expenses arising from the dramatic deterioration in market conditions during the third quarter, including declining home prices, increasing unemployment, a significant decline in consumer spending and a considerable tightening of both consumer and business credit.
That ‘non-cash charge of $14.3bn’ is essentially a writedown on tax-related assets, and an admission that the company will not return to profitability anytime soon.
Freddie now has a negative net worth – of $13.7bn – and negative shareholder equity of $13.8bn.
This latter deficit is only temporary, since the GSE’s regulator has petitioned the Treasury to provide it with $13.8bn so it can pretend that whole negative shareholder equity thing never happened. Freddie expects to receive the money by November 29.