Wenn Ihr die Nerven habt empfehle ich einen Blick durch die Slides der Fannie Mae Q2 Telefonkonferenz Präsentation zu werfen. Ein paar ganz üble Charts sowie ein Management das immer noch auf zu vollkommen nutzlosen Aussagen wie den folgenden beharrt.....
Core capital of $47.0 billion at end of 2008 Q2 is above both our statutory minimum capital requirement, a surplus of $14.3 billion, and the OFHEO-directed minimum capital requirement, a surplus of $9.4 billion.
Hussman With regard to Fannie Mae's report, the most interesting figure wasn't the reported $2.3 billion loss, but rather the much larger deterioration in the reported fair value of Fannie's balance sheet. We can observe what's going on by comparing Table 32 of Fannie Mae's Q2 2008 10Q filing with the same table in Fannie Mae's Q1 2008 10Q filing.
This is another misleading statement. Technically, based on the Office of Federal Housing Enterprise Oversight (OFHEO) requirements, both companies have dequate capital cushions. But that's like jumping out of an airplane without a parachute and arguing on the way down over whether your shoes have the right government mandated soles. Yes, according to OFHEO guidelines, Fannie and Freddie have the right soles. But put in context, those shoes aren't going to be of much use when their feet hit the ground without a parachute
As of June 30, 2008, the fair value of Fannie Mae's common equity (that is, the book value available to common shareholders) was -$5.39 billion, compared with a March 31 fair value of -$2.07 billion. What's notable here is that this deterioration (-$3.32 billion) was even larger than the -$2.30 billion loss that Fannie reported to investors, which was itself about four times higher than the loss analysts had estimated.Note that balance sheet losses are excluded from earnings. Financial stocks tend to be reasonably valued when they trade at tangible book value, but simply put, Fannie Mae has no tangible book value. The common stock is now a call option.
Even if we include the fair value of preferred equity, we find that on a fair value basis, Fannie Mae is operating at a gross leverage multiple of 72.7 (total assets comprised primarily of mortgage loans, divided by shareholder equity). In other words, a slight 1.4% deterioration in the value of Fannie's book of assets will wipe out all of the remaining shareholder equity. This makes Long Term Capital Management look like a conservative strategy.
Fannie Bid to Preserve Capital Is Temporary WSJ
Postponing a problem is very different from solving one. Yet Fannie Mae is going to extraordinary lengths to preserve capital -- even trying to forestall big losses by giving essentially free money to delinquent borrowers.
This is a temporary fix that could leave investors with a bad surprise down the road.
In Friday's second-quarter results, Fannie said it made $127 million in loans that allow delinquent borrowers to get current on their mortgages. That prevents Fannie having to repurchase the loans from mortgage trusts at face value and take an immediate charge based on market prices.
In the second quarter, the average markdown for such repurchased loans was 47% and resulted in an overall charge of $380 million. Without the special loans to delinquent borrowers, Fannie might have been forced to buy back 17,901 loans. That could have meant an additional charge of as much as $1.5 billion, based on the losses Fannie took on the mortgages it did repurchase.
Superficially, that isn't a bad trade. Fannie avoids a big extra charge by issuing just $127 million of new loans. The trouble? The special loans have their own cost. Fannie is already carrying the $127 million on its books at just $4 million, meaning it wrote the loans down to about three cents on the dollar.
In its second-quarter filing, Fannie said it expects such special loans "to continue to reduce the number of delinquent loans that we otherwise would have purchased" throughout 2008.
That may preserve capital. But it is really just postponing a problem festering out of investors' sight.
> More comedy from Hank.....Paulson Interview: No Plans to Insert Money in Fannie and Freddie . I´ll bet that during the coming 6-8 weeks the Taxpayerwill be the only one buying the new equity....
> Hier gibt es weitere Aussagen die in 6-8 Wochen vollkommen von der Wirklichkeit eingeholt werden sein dürften......Paulson Interview: No Plans to Insert Money in Fannie and Freddie .