Private-Label MBS Lead to 12 FHLBs' Combined $672MM Loss

The fourth-quarter 2008 results for all 12 Federal Home Loan Banks are now in and they show a combined net loss of $672 million, compared to $846 million in earnings a year ago, mainly due to impairment charges on private-label mortgage-backed securities. "The combined net loss for the fourth quarter of 2008, resulted primarily from $1.8 billion in 'other than temporary impairment' charges on certain private-label MBS and home equity loan investments, and net losses on derivatives and hedging activities related to SFAS 133," the FHLBank's Office of Finance said. The Atlanta FHLBank saw earnings of $74.6 million in the fourth quarter after taking an OTTI charge of $99 million on its private label MBS. In related news, more than half of Fannie Mae and Freddie Mac's $178 billion holdings of AAA-rated, private-label subprime and Alt-A MBS are not below investment grade, according to GSE regulator James Lockhart.