Fannie Mae (FNM), the country's largest mortgage lender, said Friday when it reported its latest quarterly results that it needs another $16.3 billion to stay afloat. Fannie Mae has been under water since the government started bailing it out in 2008.

The reason for Fannie's persistent problems are the mortgage defaults spreading throughout the housing industry. Serious delinquencies rose to 5.38% as of December 31, up from 4.72% on Sept 30 and 2.42% at the end of 2008.

Continue reading Fannie Mae Requests Another $16.3 Billion from the U.S. Treasury

Fannie Mae Requests Another $16.3 Billion from the U.S. Treasury originally appeared on BloggingStocks on Mon, 01 Mar 2010 11:50:00 EST. Please see our terms for use of feeds.

From TheStreet.com Network

• Price Action Suggests Dollar Upside Break
• AIG's Benmosche to Get Paid

TheStreet.com's Jim Cramer says the bizarre rules these days make it worth looking at stocks through a different lens.

How much should we care about low-dollar speculation? How much should we care about the incessant trading in CIT (NYSE: CIT) (Cramer's Take) and Fannie Mae (NYSE: FNM) (Cramer's Take), Alcatel-Lucent (NYSE: ALU) (Cramer's Take), or Vonage (NYSE: VG) (Cramer's Take) and Sprint (NYSE: S) (Cramer's Take)? Or even Citigroup (NYSE: C) (Cramer's Take)?

First, I have to tell you that I worry about it less than I used to. Why? Because when we used to have rules and government officials that were willing to speak the truth about stocks, we wouldn't have these single-digit players out there every day. But without it, how in heck can people not believe that Fannie and Freddie Mac (NYSE: FRE) (Cramer's Take) are the biggest and best bets on a turn in housing?

Continue reading Cramer on BloggingStocks: Reasonable speculation

Cramer on BloggingStocks: Reasonable speculation originally appeared on BloggingStocks on Thu, 27 Aug 2009 09:30:00 EST. Please see our terms for use of feeds.

Fannie Mae (NYSE: FNM) closed at $1.86. FNM option volume was active on August 25 with 173,103 contracts trading. FNM overall option implied volatility is at 151.

Freddie Mac (NYSE: FRE) closed at $2.06. FRE option volume was active on August 25 with 53,469 contracts trading. FRE overall option implied volatility of 139 is near its four-month average of 138, according to Track Data.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Options Update: Fannie Mae and Freddie Mac volume and volatility suggests movement originally appeared on BloggingStocks on Wed, 26 Aug 2009 08:00:00 EST. Please see our terms for use of feeds.

Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have similar purposes but different structures. Fannie Mae was founded in 1938 during the Great Depression for the purpose of purchasing and securitizing mortgages to keep funds flowing to institutions that lend money to home buyers. In 1968, the government converted Fannie into a private shareholder-owned corporation. Freddie Mac, on the other hand, was created in 1970 as a government-sponsored enterprise to expand the market for secondary mortgages in the US.

In September 2008, the Federal Housing Finance Agency (FHFA) director James B Lockhart announced that Fannie and Freddie would be placed under the conservatorship of FHFA.

Continue reading Should we say goodbye to Fannie and Freddie?

Should we say goodbye to Fannie and Freddie? originally appeared on BloggingStocks on Wed, 15 Apr 2009 11:00:00 EST. Please see our terms for use of feeds.

Continue reading Closing Bell: Set up profit taking on news (CVX, DNDN, FNM, GS, JNJ)

Closing Bell: Set up profit taking on news (CVX, DNDN, FNM, GS, JNJ) originally appeared on BloggingStocks on Tue, 14 Apr 2009 16:00:00 EST. Please see our terms for use of feeds.

According to a report today in The Wall Street Journal [subscription required], Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) -- those twin titans of mortgage mayhem -- are planning to dish out $210 million worth of retention bonuses over the next 18 months. James Lockhart, director of the Federal Housing Finance Agency, explained that $51 million in payouts were distributed in late 2008, with the rest of the bonuses to be disbursed through 2009 and into early 2010.

The news is already raising politicians' ire, since Fannie and Freddie are staying afloat only through the grace of government bailouts. The two lenders reported combined losses of roughly $108 billion in 2008, says the Journal, yet 80% of Freddie's employees and 61% of Fannie's payroll will score retention bonuses based on this bleak operating performance.

Continue reading Fannie Mae, Freddie Mac planning massive retention bonuses

Fannie Mae, Freddie Mac planning massive retention bonuses originally appeared on BloggingStocks on Fri, 03 Apr 2009 12:30:00 EST. Please see our terms for use of feeds.

Continue reading Fannie Mae next in line to hand out questionable bonuses

Fannie Mae next in line to hand out questionable bonuses originally appeared on BloggingStocks on Thu, 19 Mar 2009 08:00:00 EST. Please see our terms for use of feeds.

There is an old saying: "never fight the Fed." If you had been short this bond market, you probably could be wiped out in one afternoon. When the Federal Reserve made its announcement a short time ago that they were buying long term securities the futures on the long bond jumped 4.25 basis points, or more that $4000.00 on just one contract. If you were long say 10 contracts you would be sitting on a $40,000 profit this afternoon.

Continue reading Federal Reserve buys bonds

Federal Reserve buys bonds originally appeared on BloggingStocks on Wed, 18 Mar 2009 17:40:00 EST. Please see our terms for use of feeds.

This port was written by Minyanville contributor Minyan Peter.

Continue reading What will nationalization mean?

What will nationalization mean? originally appeared on BloggingStocks on Thu, 19 Feb 2009 14:51:00 EST. Please see our terms for use of feeds.

The dismantling of the financial stocks is mind-boggling but not entirely unexpected. Last year, we discussed the need for culpability to extend throughout the societal spectrum, from borrowers who over-extended on their credit to the institutions that financially engineered risk to policy makers who were compliant by acceptance.

The fact that many of these names are going to Fannie Mae (NYSE: FNM) is perhaps the healthiest possible scenario through the lens of "taking medicine as a function of time and price." It is, however, massively unfortunate for the employees who simply followed marching orders.

We're talking livelihoods lost here. Life savings evaporated. Careers ruined.

Therein lies the "other side" of the aforementioned "healthy" scenario: societal and structural implications. We've talked about the former ad naseum so I don't think we need to beat that horse. On the structural side -- and something to keep in mind for those calling for the heads of financial professionals -- is the fact that if there isn't incentive for people to fix the system, it simply won't get fixed.

Incentive on Wall Street equals money. The industry will be austere and ripe with humility, mind you, but we must find our way to a healthy supply-demand and a balanced give-and-take. For if we don't crack the code in short order, we risk that our capital market structure will cease to exist altogether.

The bank shot originally appeared on BloggingStocks on Thu, 15 Jan 2009 17:15:00 EST. Please see our terms for use of feeds.

This situation is called being "upside down," which means that you owe more than the house is worth. Selling your home when you are "upside down" is called a "short sale."

This is not a new practice. It has been used before but never without a buyer. Most deals fell through because the paper work took too long or because lenders, servicing firms and mortgage guarantors rejected the sales price. For these reasons, "short sales" have a bad reputation among real estate agents.

Continue reading Fannie Mae's new program. Is this a winner or what?

Fannie Mae's new program. Is this a winner or what? originally appeared on BloggingStocks on Mon, 12 Jan 2009 14:15:00 EST. Please see our terms for use of feeds.

Continue reading Picking the right bond fund to stash your cache and grow it safely

Picking the right bond fund to stash your cache and grow it safely originally appeared on BloggingStocks on Mon, 12 Jan 2009 13:01:00 EST. Please see our terms for use of feeds.

Last Friday the Fed announced a $200 billion dollar program for buying toxic assets from banks to help them stay afloat. Yesterday the New York Federal Reserve Bank started a new $500 billion dollar program for buying toxic securities from Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM)

Since Friday the yield on 30 year agency mortgage securities dropped from 208 basis points over Treasuries down to 190 basis points. This has had the effect of lowering mortgage rates. The rate on a 30 year fixed mortgage has dropped to 5.3% from 6% last November.

The Fed is using four firms to conduct these transactions. They are: BlackRock (NYSE: BLK), Goldman Sachs (NYSE: GS), Pimco and Wellington Management.

As was stated previously, the Fed has not disclosed the details of any of these repurchase programs. They are saying that they will be doing this "as the need arises."

A dramatic effect of this new Fed action is the sharp drop in US Treasuries, which today are down another 217 basis points on the 30 year March futures contract. Since last Wednesday the March 30 year bond futures contract has dropped from 141 down to 133 for a drop of about 800 basis points or $8,000.

I guess we can assume from all of this that Freddie Mac, Fannie Mae and the banks are in much deeper trouble than the Fed led us to believe last November. The Fed is not calling these bailouts any longer. They are just going ahead with these massive programs, programs that, by and large, investors and the public are not aware of.

What are your thoughts on these programs?

The devil in the details: Fed doesn't disclose repurchase facts originally appeared on BloggingStocks on Tue, 06 Jan 2009 17:00:00 EST. Please see our terms for use of feeds.

July 14 -- Dow 11,055 (down 45 points); trading range, 327 points

The third-largest bank failure in U.S. history made headlines after IndyMac Bancorp collapsed following a run on the bank.

An FDIC takeover of IndyMac attempted to keep operations as normal as possible, but doubts began to arise about other troubled regionals like Washington Mutual (later sold to JPMorgan Chase) and National City (now a part of PNC Financial after an October "take-under," where the company was purchased at a discount to its stock value).

But wait, there's more. After years of financial shenanigans and controversy, Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) were placed into conservatorship in a federal takeover of the government sponsored enterprises. This contributed to another slaughter in the financials, with 96% of the sector posting a loss for the session.

Oh, and if you wanted to drown your sorrows over an American-owned brew, scratch Budweiser off your list. Anheuser-Busch agreed to merge with Belgium's InBev for $70 a share, or $52 billion.

Greg Tucker is the executive editor of OptionsZone.com.

10 craziest days on Wall Street in 2008: #10 Saving our Fannie (and Freddie) originally appeared on BloggingStocks on Sat, 03 Jan 2009 10:00:00 EST. Please see our terms for use of feeds.

This shorting strategy defied all odds and pretty much defined the year for the stock market.

I don't know anyone who truly thought Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) would both be trading under a buck as 2008 came to close.

The idea of these once-in-a-class-by-themselves quasi-government entities that touch more than 85% of all mortgages in the United States going into full receivership by the government was considered foolish, almost ludicrous discussion that only invited serious sarcasm from professional Fannie and Freddie watchers.

The ultimate collapse of both stocks was devastating, not only to investors that continued to believe all the false headlines spewing from the front offices of FNM and FRE that said they were more than amply capitalized, but the whole financial sector as well.

The notion that Freddie and Fannie were too big to fail was a given, sucking in long-side investors at every 10-point interval on the way down to zero.

Continue reading Best Trades of 2008: #5 Shorting 'too big to fail' Fannie and Freddie

Best Trades of 2008: #5 Shorting 'too big to fail' Fannie and Freddie originally appeared on BloggingStocks on Wed, 31 Dec 2008 15:00:00 EST. Please see our terms for use of feeds.

For most investors and traders, 2008 was a tough year. But while many people saw their portfolio take a merciless beating and watched their retirement vanish into thin air, there were a select few who made a killing.

In fact, if you had been on the right side of any of these bets, you could have banked enough dough to make up for your losses and then some.

Here are five trades everyone wishes they had made in 2008:

#1 Shorting 'Chindia' the day after New Year's: The Chindia experience peaked in Beijing with Michael Phelps, and the market knew it would a year and a day before the Closing Ceremonies.

#2 Getting long and staying long the 30-year Treasury bond: This strategy went from being a modestly successful trade through October to a hero-sized trade in the past 45 days.

#3 Shorting oil on the Fourth of July: The drop in oil prices has been nothing short of unbelievable. Those that had the fortitude to short crude in early July (and had the stones to stay with that trade) made a killing.

#4 Buying DryShips (DRYS) at the November low: Following its meteoric rise to $116, the stock careened all the way down to $3. But if you went long then, you saw the share price quadruple in less than a month.

#5 Shorting 'too big to fail' Fannie and Freddie: This shorting strategy defied all odds and pretty much defined the year for the stock market.

Best Trades of 2008: 5 moves that could have made you rich originally appeared on BloggingStocks on Wed, 31 Dec 2008 09:00:00 EST. Please see our terms for use of feeds.

Freddie Mac (NYSE: FRE) said today that it received a notice from the New York Stock Exchange (NYSE), warning that the mortgage firm could be delisted due to its rock-bottom share price. FRE has been trading below $1 for more than 30 days now, and must notify the exchange by December 2 whether it intends to rectify the problem.

If Freddie does decide to meet the NYSE's listing requirements, it will have until mid-May to address the share-price issue; if not, its common stock and preferred stock are subject to suspension and delisting. In a statement, Freddie Mac said it's "currently working with its conservator, the Federal Housing Finance Agency, to explore options relating to this deficiency and has not yet determined its response."

Earlier this week, Freddie's sister Fannie Mae (NYSE: FNM) received an identical warning from the NYSE. The troubled siblings hit the headlines for somewhat more respectable reasons earlier this morning, when the pair announced they would temporarily halt foreclosures during the holiday season.

After opening broadly higher this morning, FRE has fallen to a 6% loss at 46 cents per share. Sibling Fannie is faring better today; that stock is up roughly 9% at last check -- though today's gain takes the per-share price only as high as 36 cents.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Freddie Mac warned of possible delisting by NYSE originally appeared on BloggingStocks on Fri, 21 Nov 2008 12:40:00 EST. Please see our terms for use of feeds.

The banking system has been crumbling for over a year, but last month's collapse of American International Group (NYSE: AIG) -- which prompted an $85 billion government takeover -- suggests that insurance is not immune from the problems. As a reminder, AIG got snared in the $62 trillion Credit Default Swap (CDS) market whose growth was spurred by McCain advisor, Phil "Americans are Whiners" Gramm.

And as insurance crumbles, banks keep suffering. Bank of America (NYSE: BAC) and National City Corp. (NYSE: NCC) are both hurting. How much?

• Bank of America's earnings plunged 68% to $1.18 billion, or $0.15/share -- missing by 60% analysts' forecast of 62 cents. Bank of America will raise capital by selling $10 billion of common stock and slashing its dividend in half from 64 cents to 32 cents. One analyst cut the bank's 2009 earnings estimate to $2.50 per share from $3 per share -- this is well below the $3.12 per share from a Thomson Reuters analyst poll -- and lowered his price target by $2 to $26.

• National City Corp. and its National City Bank both suffered debt downgrades from Fitch. For instance, Fitch slashed the bank subsidiary's long and short-term Issuer Default Ratings (IDR) to A- from A. And it lowered the bank and holding company's Individual rating to C from B.

Continue reading Financial foundation crumbles: First banks, now insurance

Financial foundation crumbles: First banks, now insurance originally appeared on BloggingStocks on Tue, 07 Oct 2008 09:20:00 EST. Please see our terms for use of feeds.

Countrywide lent money to Fannie, Freddie executives originally appeared on BloggingStocks on Thu, 25 Sep 2008 11:55:00 EST. Please see our terms for use of feeds.

BusinessWeek offers an excellent critique of Treasury Secretary Henry Paulson's $700 billion plan to conduct a reverse auction of $13 trillion in financial toxic waste. But more importantly, it proposes a solution that could be just what we need to solve the problem -- recapitalizing the strongest banks and letting the weakest merge or fail. As I posted, such a strategy would not only solve the real problem -- a lack of capital -- but it would give taxpayers an equity stake in those banks. And that stake might be sold at a profit in a future economic recovery, helping us recoup our investment in this plan.

What exactly is the problem? Too much financial toxic waste and not enough capital to back it up. More specifically, financial institutions (FIs) holding the $13 trillion in mortgage-backed securities (MBS) and collateralized debt obligations (CDSs) only have about $340 billion in capital. So a 2.6% decline in the value of that toxic waste wipes out their capital. To estimate how much capital it would cost these FIs to write that down, I will assume that have already partially written it down -- to 60 cents on the dollar -- or $7.8 trillion. If its market value is even lower, say 20 cents, they would need to take a $3.1 trillion write-down to mark it to market -- leaving FIs with a capital deficit of $2.8 trillion ($3.1 trillion minus $340 billion).

Paulson's plan is deeply flawed since the reverse auctions -- which reward the FI willing to sell its toxic waste for the lowest price -- will either add misery to FIs or taxpayers. The FIs that sell toxic waste that's on their books at 60 cents on the dollar for, say, 20 cents on the dollar will be required to take a 40 cent loss. This will deplete their capital as I illustrated above and they will not be able to raise more.

Continue reading BusinessWeek's brilliant solution to the financial mess

BusinessWeek's brilliant solution to the financial mess originally appeared on BloggingStocks on Thu, 25 Sep 2008 08:52:00 EST. Please see our terms for use of feeds.