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Fannie Mae: Back to the Well for $100 Billion
Insanity returns for another round of "What Can We do Differently This Time?"Fannie Mae's already-depleted shares took a new hit on Friday as it became clear that the biggest buyer of mortgages in the United States may need even more money. On Friday ratings agency Standard & Poor's analyst Kevin Cole said Fannie Mae is expected to need an additional $100.0 billion over the course of the year to maintain a positive net worth in 2009. Fannie reported on Thursday that it needs $15.2 billion from the government for the quarter to restore it to solvency because of larger-than-expected losses. Fannie's losses have piled up as defaults on home loans have soared. Last week, the government doubled its emergency funds for Fannie Mae and Freddie Mac, to $200.0 billion each, up from $100.0 billion -- a good thing since Cole expects Fannie will need $100 billion just this year. "Next quarter they're going to lose more money so they'll ask for more," Cole told Forbes. "I assume they'll be losing money for at least the next four quarters if not through 2010." Cole said there is a high probability that Fannie will need to draw down the entire $200.0 billion allotted to it by the government. He widened his 2009 loss per share estimate on Fannie to $20.02 per share up from $19.74. He maintained a $1 price target. Posted by: badanov 2009-03-02 |
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