A Look Back On Fannie Mae (FNM)
September 8th 2008 19:48
The big news over the weekend was the takeover of Fannie Mae (FNM) and Freddie Mac (FRE) by our government. I started writing about FNM back in March of 2005 when I said
I wondered if the amount of debt in relationship to market value was an indication of possible company failure and noted that FNM had $53.2 Billion in market value and $939.67 Billion in debt.
In April of 2005, we were told by the Office of Federal Housing Enterprise Oversight, or OFHEO that the company had violated accounting rules on the treatment of derivatives used to hedge interest-rate risks. That prompted the SEC to order a restatement of Fannie’s results for the past several years, an immensely complex undertaking that may take years. We were also told that month the magnitude of accounting problems at the FNM remains unclear. But Fannie has already estimated that problems identified so far could result in a profit restatement of more than $11 billion.
IN April of 2005, the Undollar Digest told us
In April, we asked where is the TV on FNM?
Meanwhile the stock has fallen from $80 to $55!
In August of 2005, Mover Mike outlined some of the common players in FNM and the Clinton Administration.
In March of 2006, we still did not have audited results from FNM and I noted
Turns out the housing bubble was nowhere close to being over.
I have no sympathy, none what so ever, for anyone caught in the FNM and FRE web as shareholders. The signs that this was a troubled company were there for all to see. If you lost money, it's your own damn fault. If your mutual fund or managed money account lost money, find a good class action attorney and sue their asses for violating the "prudent man rule."
I also understand that GM, Fannie Mae, AIG, and JP Morgan have trillions of derivatives, many think this is just an accident waiting to happen
I wondered if the amount of debt in relationship to market value was an indication of possible company failure and noted that FNM had $53.2 Billion in market value and $939.67 Billion in debt.
In April of 2005, we were told by the Office of Federal Housing Enterprise Oversight, or OFHEO that the company had violated accounting rules on the treatment of derivatives used to hedge interest-rate risks. That prompted the SEC to order a restatement of Fannie’s results for the past several years, an immensely complex undertaking that may take years. We were also told that month the magnitude of accounting problems at the FNM remains unclear. But Fannie has already estimated that problems identified so far could result in a profit restatement of more than $11 billion.
IN April of 2005, the Undollar Digest told us
What we’ve gotten is Fannie Mae with less than $30 Billion in equity supporting almost $1 Trillion in assets, hedged with another Trillion in derivatives. Fannie is a pure socialist creature, and will go the way of all such monstrosities. Let’s pray it doesn’t take the financial system down with it.
In April, we asked where is the TV on FNM?
FNM has accounting errors of about $11 billion. That’s more than 19 times larger than Enron’s $567 million error. Fannie faces a Justice Department inquiry, an SEC investigation and the OFHEO.
In August of 2005, Mover Mike outlined some of the common players in FNM and the Clinton Administration.
In March of 2006, we still did not have audited results from FNM and I noted
Imagine, the 2004 results are not filed yet, nor 2005 and the company can’t say if it still meets capital requirements. Now some might say the stock price discounts all the bad news, but if the housing bubble is near an end, how do you discount “for costs of dealing with houses acquired through foreclosures”?
Turns out the housing bubble was nowhere close to being over.
I have no sympathy, none what so ever, for anyone caught in the FNM and FRE web as shareholders. The signs that this was a troubled company were there for all to see. If you lost money, it's your own damn fault. If your mutual fund or managed money account lost money, find a good class action attorney and sue their asses for violating the "prudent man rule."
| 61 |
| Vote |
