Sun, Aug 09, 2009 - Page 11 News List

Freddie Mac narrows loss, but expects more aid later

AP , WASHINGTON AND NEW YORK

Freddie Mac escaped the second fiscal quarter without asking the US government for any new financial aid, but still expects to need more federal help in the future.

The government-run mort­gage finance company on Friday posted a quarterly loss of US$374 million, or US$0.11 a share, including US$1.1 billion in dividends paid to the government. Excluding those payments, the company would have earned US$768 million. In the year-ago period, Freddie lost US$1.05 billion, or US$1.63 a share.

The company was able to maintain a positive net worth of US$8.2 billion in the quarter ended June 30. As a result, it did not need to seek funding from the Treasury Department, which has provided Freddie Mac with US$51 billion since the takeover last September.

The government has pledged up to US$400 billion in aid for Freddie Mac and its sibling Fannie Mae. The two companies play a vital role in the mortgage market by purchasing loans from banks and selling them to investors. Together, they own or guarantee almost 31 million home loans worth about US$5.4 trillion. That’s about half of all US home mortgages.

“While we are seeing some early signs pointing to a housing recovery — including a modest uptick in house prices in some markets — our outlook remains cautious due to rising foreclosures, growing unemployment, tight lending standards and buyers’ reluctance to re-enter the market,” John Koskinen, Freddie Mac’s interim CEO, said in a statement.

Revenue for the quarter totaled US$7.5 billion, compared with US$1.6 billion a year earlier.

Reeling from losses from the housing bust, Fannie Mae and Freddie Mac have received a combined US$96 billion in taxpayer aid, including nearly US$11 billion requested by Fannie Mae in the past week. That is surpassed only by insurer American International Group Inc, which has received US$182.5 billion in financial support from the government.

AIG reported its first quarterly profit since 2007 on Friday, as the government-controlled insurer saw the value of some of its soured assets recover.

AIG said results at its core insurance operations fell during the second quarter due to the weak economy, a trend reported by other insurers. AIG said it earned US$1.82 billion. Total revenue rose 48 percent, to US$29.53 billion from US$19.93 billion a year earlier.

Chairman and CEO Edward Liddy said in a prepared statement that company was still contending with the effects of the company’s near-collapse last fall.

This story has been viewed 2536 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top