Fannie Mae And Freddie Mac Second-Quarter Results Highlight Ongoing Housing Market Weakness Aug 11
- ID: 1930199
- August 2011
- Standard & Poors
Results for Fannie Mae and Freddie Mac in second-quarter 2011 reflected ongoing weakness in the housing market. Credit losses remain concentrated in 2005-2008 vintage loans and hedging losses hurt profits. Operating losses and sizable dividends to the U.S. Treasury led these firms to request a combined $6.6 billion in additional capital from the Treasury to cover deficits. Standard & Poor's Ratings Services doesn't believe either institution has the capacity to generate sufficient earnings to cover annual dividends currently owed to the Treasury. Net interest income at both firms was largely flat from the first quarter. Interest rates declined and helped to lower the cost of borrowing for both firms, but also kept returns on earning assets low. Both firms continue...
Companies mentioned in this report are:
- Fannie Mae
- Freddie Mac
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.