Fannie Posts Massive Loss for 4Q and Year

WASHINGTON -- Operating as a ward of the federal government, Fannie Mae posted a massive $25.2 billion loss in the fourth quarter, blaming its abysmal performance on asset- and derivative-related writedowns. For the year the GSE lost an eye popping $58.7 billion. The Congressionally chartered mortgage investing giant declared that it had a negative net worth of $15.2 billion at year-end -- a gap that must be filled with tax payer money. FHFA director James Lockhart has already requested that the Treasury Department cover the financial hole by increasing its preferred stock ownership stake in the company. In 2007 Fannie lost just $2.1 billion. It was taken over by the Federal Housing Finance Agency in early September. Its common stock continues to trade on the NYSE but at just 40 cents a share. Freddie Mac, also a ward of the government, is expected to issue its 4Q earnings shortly. Similar results are expected. Both GSEs were large investors in subprime and alt-A mortgage-backed bonds.