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The New York Times reports that Freddie Mac (NYSE: FRE) lost $821 million in the second quarter. Its revenues rose 10% to $1.69 billion -- including a 92% spike in net interest income to $1.5 billion. So why the loss? It wrote off 53% more loans than it did in the first quarter -- its Q2 credit losses totaled $810 million.
CEO Bill Styron, who ought to contribute his $38 million in gains to the bailout, is committed to raising $5.5 billion. It's just not clear how he is going to accomplish this. (Maybe taxpayers will provide the money.) But he has decided to cut dividends by 80% from 25 cents a share to 5 cents a share.
Meanwhile, since its early-July low of $3.89, Freddie's stock has more than doubled to $8.04. But somebody in market land is not happy with Styron's latest performance -- in pre-market, Freddie's stock is down 16%. Keep up the good work Bill!
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter
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