Bailed-out mortgage giant Freddie Mac (FRE) said Wednesday that it lost a massive $23.9 billion in its fiscal fourth quarter, hurt by increasingly high investment and credit losses.
The McLean, Virginia-based company said that it lost $23.9 billion, or $7.37 per share, in the fiscal fourth quarter, compared with a net loss of $2.5 billion, or $3.97 a share, in the year-ago period.
The latest quarterly results included $13.3 billion in net mark-to-market losses on Freddie’s derivatives portfolio, as well as credit-related expenses of $7.2 billion.
For the full-year 2008, Freddie lost a staggering $50.1 billion. The company warned that further bailouts from the federal government may not be enough to keep the company solvent.
Freddie and its sister company, Fannie Mae (FNM), have agreed to temporarily halt all foreclosures sales and evictions, instead attempting to rework loans with struggling homeowners.
Freddie Mac shares have fallen 99% in the past year.
The Bottom Line
We are hoping the government has seen some of this data as they attempt to prop up the Fannie Maes (FNM) and Freddie Macs (FRE) of the world. The worst thing that can happen now is to underestimate the potential size of the continued bailouts. Public sentiment has a real short leash on what has been coming out of Washington, so the trends should be getting analyzed by people that understand the breadth of the problem.
Freddie Mac (FRE) does not currently pay a dividend.
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