Fannie Demands Another $5.1 Billion In Aid From Treasury In Q2, $103.8 Billion Total Since Conservatorship

Tyler Durden's picture

There is just one number that is important in the just released Fannie Mae Q2 earnings release, in which the firm reported a loss of "just" $2.9 billion, which includes $6.1 billion in credit related expenses all of which was blamed on Bush (no, really "substantially all of which were related to the company’s legacy (pre-2009) book of business"). The number that matters is that for the 11th consecutive quarter a bankrupt Fannie Mae came running to the Treasury, this time requesting $5.1 billion from Tim Geithner, the second highest number in the past year. This brings the total cumulative bailout since Fannie's conservatorship to a stunning $103.8 billion. And wasn't it pathological liar Tim Geithner who himself said a month ago that the GSEs are no longer a burden on the Treasury? Perhaps he can explain the chart below taken from the company's announcement.

As for the reasons for the ongoing losses, it has everything to do with the abysmal ongoing situation in housing.

The loss in the second
quarter of 2011 reflects the continued weakness in the housing and mortgage markets, which remain under pressure from high levels of unemployment, underemployment, and the prolonged decline in home prices since their peak in the third quarter of 2006. Pursuing loan modifications,  key aspect of the company’s strategy to reduce defaults, also contributed to its loss in the quarter. Fannie Mae expects its credit-related expenses to remain elevated in 2011 due to these factors.


“We remain the largest source of liquidity for the U.S. mortgage market, and we are committed to creating long-term value by helping to build a stable, sustainable housing market for the future,” said Michael J. Williams, president and chief executive officer. “We are focused on reducing taxpayer exposure by limiting our credit losses and building a strong new book of business. Our new book of business is now nearly half of our overall single-family book and we expect these new loans will be profitable over their lifetime.”


Fannie Mae’s net loss attributable to common stockholders in the second quarter of 2011 was $5.2 billion, or $(0.90) per diluted share, including $2.3 billion in dividend payments to the U.S. Treasury. The company’s net worth deficit of $5.1 billion as of June 30, 2011 reflects the  recognition of its total comprehensive loss of $2.9 billion and its payment to Treasury of $2.3 billion in senior preferred stock dividends during the second quarter of 2011. The Acting Director of the Federal Housing Finance Agency (“FHFA”) will submit a request to Treasury on Fannie Mae’s behalf for $5.1 billion to eliminate the company’s net worth deficit. Upon receipt of those funds, the company’s total obligation to  Treasury for its senior preferred stock will be $104.8 billion.

On the other hand, should American homeowners, aka squatters, actually start paying their mortgages, Fannie may be amazed at how quickly it will be able to turn that frown (and quarterly bailout request) upside down. Alas, that would mean fewer iPads sales and the Borg collective can not have that. After all what better reason to justify an imminent TARP 2 than an infinity +1 number of purchases of Angry Birds.

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Id fight Gandhi's picture

Oh Fannie is fine. Barney frank told me so a few years ago. He wouldn't lie. Right???

Mike2756's picture

Enough is enough, put them out of their misery.

ratso's picture

Fairness demands that George Bush write the check for this personally.  It is high time that he was held accountable for at least one of the grand mistakes and disasters that occurred under his watch.

Or, should we taxpayers continue to bail out his legacy - of so...



hedgeless_horseman's picture

 And wasn't it pathological liar Tim Geithner who himself said a month ago that the GSEs are no longer a burden on the Treasury? Perhaps he can explain the chart below taken from the company's announcement.

In government, elections have consequences, but apparently lies do not.

ratso's picture

Did you forget about the dead silence from the Republicans in Congress when DIck Cheney said "Deficits don't matter"? 

There's plenty of rock to go around, how about just owning some of the truth.

trav7777's picture

so at what point will anything have happened "under Obama's watch"?

MachoMan's picture

when things happening under his watch are no longer labeled racist.

Cash_is_Trash's picture

Dear Sir,

Misery is bullish.


Central Economic Planning Command for Global Prosperity

trav7777's picture

can't do would be a blackpocalypse, because about half of the FNM employees are black.  Every effort must be expended to persist and maintain the artificial black middle class, even running companies that lose billions.

GeneMarchbanks's picture

Dismal. These Zombies are a huge reason why the Japan comparison is made as a reference point. Sadly, thinking that this can go on in a country like the US is the biggest mistake an analcyst can make; ala Mish.

War. Some kind of war. And soon.

Cash_is_Trash's picture

Some kind of war

How about that 'non-war' in Libya? Yeah, THAT war.

And I don't think the U.S. is winning it.

nowhereman's picture

Does anyone really bother to read Mish anymore?

kito's picture

but my local realtor told me it was a good time to buy--and they gave me free coffee and a pen....

Flakmeister's picture

Somebody had to be left holding the bag... Fannie and Freddie boards didn't know or care what was going on as long as their bonus checks were still rolling in...

Let's call it the socialization of losses....

tarsubil's picture

Hey, at least Fannie and Freddie are generating dividends. I mean you have to make an investment to reap the rewards...

The best was when the former head of Fannie was called to Congress and he said Fannie made all kinds of money during his time there which ended right before everything imploded. He was very confident in the fact that he deserved all money he was given.

hedgeless_horseman's picture

...generating dividends.

You mean wealth transfer, right?

tarsubil's picture

I think TPTB do such a good job sliding the shells around that I have no idea where the pea is or if there is a pea anywhere at all. Or in other words, I have no idea what this should be called other than crazy.

Doyle Hargraves's picture

If there is a pea anywhere the debt brotha says you better eat it!!!

Bob's picture

Now you're just getting all caught up in reality.  If losses are recognized and balance sheets "balanced," Mr. Market will commit hari-kari.

Markets.must.not.drop. It's for our own good!

Apparently our collective lives depend upon it. And everybody knows. 

So who needs reality any more?

oogs66's picture

but their debt doesn't count against the debt ceiling limit because clearly we don't guarantee them :D  enron would be proud

slaughterer's picture

A good deal of Fannie Mae's losses stem from the dividend they pay to the government, which the government returns through these quarterly handouts.   This is another Ponzi.

tarsubil's picture

Hur? It seems the quarterly handouts predate the dividends.

Debt-Penitent's picture

We are focused on reducing taxpayer exposure by limiting our credit losses and building a strong new book of business.

...i.e. "Liabilities" to the taxpayer.  Hey, why doesn't Freddie and Fannie show on the big debt count?  We have to show our liabilities on our sheets.

pepperspray's picture

Fuck angry birds

wang's picture
wang (not verified) Aug 5, 2011 7:11 AM

David (Meet the Press) Gregory was just on Bloomberg

republican hardline on debt reason  for market declines but the good news according to the anchor who some say looks like a chimp was that the Dow is up over Obama's tenure

Bob's picture

The politicians and corporate media talking heads, having installed Mr. Market as the impersonal and unimpeachable Arbiter of Truth, are now pointing to his recent squawks and contortions as proof that "The Market," dissatisfied with the deficit deal, is demanding further "stimulative" tax cuts and decreased government spending. 

Get money to the "job creators" while there's still time!  Never let a crisis go to waste. 

We'll be sacrificing virgins to Mr. Market before it's over.

Buckaroo Banzai's picture

The gift that keeps on taking.

spanish inquisition's picture

Looks like executive bonuses are safe for another year!

Sir Real's picture

Here is a thought.

Setup a special commission to clawback all ill gotten gains during the financial crisis and pay down the debt?

GSEs would be a great place to start.  The dems and reps dirty laundry would be laid-out for all to see.

Next stop - TBTF.

Now that would be real change.

krispkritter's picture

How about we start smaller. Like with the douchebags who ran/run these moneysinks? Franklin Raines for starters. Strip them of everything, revoke their citizenship, and ship them off to Gitmo or Iraq. You wanna screw the American people? Well we can screw you back...

spankfish's picture

QE2 is so old school... now QE3... that will be the new date rape drug of choice!

Rainman's picture

F & F are Treasury backstopped to infinity ( approved by Congress Christmas Eve 2009 ). Not a creature was stirring... the commoners had sugar plums dancing in their heads.

PulauHantu29's picture

I read the total losses to Fannie and Freddie may reach over $600 Billion. So $103 Billion down, $500 Billion to print.

Add that to the $1 Trillion in student loans that are shakey and the taxpayers are on the Hook for alot of poor loans...and poor governance.

trav7777's picture

the taxpayers sent shit like Barney Fag back to Congress over and over again

hedgeless_horseman's picture

“Every nation has the government it deserves.”
(“Toute nation a le gouvernement qu’elle mérite.”)

-Joseph DeMaistre (1753-1821)

jelyfish's picture

The longest backdoor bailout for the banks.  It seems to incentivise foreclosures ... chasing the PMI.

Chippewa Partners's picture

The Definition of EPIC FAIL is Franklin Raines NOT in jail.

PulauHantu29's picture

All these corrupt companies will Suck the Tit for more and more Milk until it Bleeds.

chinawholesaler's picture

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