Fannie Mae Weakens Financially
A quick scan of Fannie Mae quarterly financial data can be an eye-opener. Of course, the most recent quarter isn't available due to the accounting problem, but lets use what is available; the four quarters from June 30, 2004 and back. Compared to the quarter ending September 30th, 2003, Net Income has declined 58%. And if the Securities and Exchange Commission rules against the mortgage giant on accounting for derivatives, the firm will have to post a 9 billion dollar charge. Investors have also upped the shares "short"; that is betting the stock price will fall, some 2.28 million shares in the past month.
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12.16.04 Todays SEC ruling against Fannie Mae will cost the GSE. "The Securities and Exchange Commission's chief accountant has directed Fannie Mae to restate its earnings for violating hedge accounting rules, a move that could wipe out $9 billion or more in earnings dating back to 2001".
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