OFHEO: GSEs 'Significant Supervisory Concern'

Even though Fannie Mae and Freddie Mac have made "good progress" in fixing the operational problems that led to their respective accounting scandals, the two remain a "significant supervisory concern," according to a new report issued by their regulator. In the Office of Federal Housing Enterprise Oversight's annual report to Congress, the agency notes that the two posted a combined loss of $5.2 billion last year after writing down the value of their mortgage portfolios and taking losses on derivatives. The agency says the GSEs are a concern "due to poor financial performance and the quantity of credit risk resulting from the continued market deterioration and its dominant, adverse impact on current and future earnings." At deadline time, the two companies had not issued comments on OFHEO's findings. OFHEO can be found at http://www.ofheo.gov.