Like the irresponsible son who goes to his daddy asking for money to cover gambling losses so loan sharks don’t bust his kneecaps, Fannie Mae is begging taxpayers for $7.8 billion because it lost so much money last quarter on derivatives. The $5.1 billion loss in the third quarter dwarfs last year’s awful third quarter shortfall of $1.3 billion.
The Financial Times (registration required) reports declining interest rates led to Fannie Mae’s heavy derivatives and securities losses, accounting for $4.5 billion of the debacle.
The U.S. Treasury bailed out Fannie Mae, which guarantees about half of single-family mortgage debt, in 2008. It’s important to Fannie Mae that it’s been deemed too big to fail, because that way it’s able to keep a straight face when asking the government for $111 billion.
Fannie Mae asks for $7.8bn as losses widen [Financial Times (registration required)]
Previously: Freddie Mac Wants $1.5 Billion From Taxpayers