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WP: Need for Aid Grows at Fannie Mae


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As the government's bailout of the banking sector appears to be leveling off, its rescue of Fannie Mae is rapidly growing more expensive -- and the company said there's no end in sight.

Fannie Mae said this morning it lost $23 billion in the first three months of the year, resulting in a $19 billion shortfall to keep the company solvent. Under the agreement with the government, which took over Fannie Mae last fall, the loss triggered an automatic $19 billion investment from the U.S. Treasury.

Fannie Mae, a mortgage finance giant, has lost tens of billions of dollars over the past year on faulty investments in mortgages and mortgage securities. The government previously injected $15 billion into Fannie after it lost money in the final three months of 2008 and it has warned of continuing losses well into 2009. Because the company has no capital cushion, all of those losses will continue to be offset by taxpayer infusions of capital.

Although only Fannie Mae reported earnings today, its sister company Freddie Mac reports its earnings in the coming weeks and its financial position has also been deteriorating.


well so long as they aren't giving out bonuses...


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