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Dayton Business Journal...
Fannie Mae, Freddie
Mac request $3.1 billion
by Jeff Clabaugh, DBJ Contributor
Friday, February 25, 2011
Fannie Mae and Freddie Mac both reported significantly improved
quarterly results, even as both seek more government aid.
Combined, the two have requested another $3.1 billion draw from their
Treasury Department lifeline, after both reported negative net worth
after making dividend payments to the government.
Freddie Mac (OTC BB: FMCC) has requested an additional $500 million.
Fannie Mae’s (OTC BB: FNMA) request is for $2.5 billion. Since 2008,
the two have drawn nearly $156 billion in government aid.
Fannie and Freddie were seized and put into government conservatorship
in September 2008. The Treasury Department holds a nearly 80 percent
stake in both companies.
For the quarter, Fannie Mae reported net income of $73 million, its
first quarterly profit in three years. Freddie Mac reported a $113
million quarter loss, compared to a net loss of $6.5 billion a year
earlier.
U.S. Treasury Secretary Timothy Geithner presented a report to Congress
earlier this month addressing the issues facing the federal mortgage
companies.
The report’s three options were:
• Privatizing mortgage finance nearly altogether and limit the
government’s role to narrowly targeted subsidies, like FHA, USDA and
Department of Veterans’ Affairs financing;
• Adding a layer of government support that could be implemented more
broadly to ensure access to credit during a housing crisis; and
• Allowing the government to guarantee mortgages but under much more
stringent capital and oversight requirements.
A move to privatize the mortgage industry could be a boost to some
banks with a presence in the Dayton region, such as Bank of America
(NYSE: BAC); Huntington Bancshares (Nasdaq: HBAN); Fifth Third Bancorp
(Nasdaq: FITB); PNC Financial Services Group Inc. (NYSE: PNC); LCNB
Corp. (OTC BB: LCNB.OB; KeyCorp (NYSE: KEY); First Financial Bancorp
(Nasdaq: FFBC); JPMorgan Chase and Co. (NYSE: JPM); US Bancorp (NYSE:
USB); and Park National Corp. (AMEX: PRK).
Read it with links at the Dayton Business Journal
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