Fannie Cannot File Financials, Shrinks Portfolio
The big news yesterday was that Fannie Mae won't be reporting for the first quarter. "Embattled mortgage company Fannie Mae said Wednesday that it is again missing a regulatory deadline for filing a financial report, this time for the first quarter, because of the reworking of its accounting amid an investigation by federal regulators."
Any other firm would be facing delisting and a ratings cut. The stakes are so high, that's not even being discussed. A couple of months ago this blog highlighted Fannies' statements that many of the mortgages being issued were too risky for the small return, something they reiterated.
"If current credit conditions continue, Fannie Mae expects the prevalence of non-GSE securities issuance to continue along with growth in higher-risk assets backing those securities. 'Given our objective of managing credit risk in a disciplined manner, this would to some degree constrain growth in outstanding MBS,' the company said."
"Fannie Mae said its market share of mortgage-related securities issuance dropped to 29 percent in 2004 and 24 percent in the first quarter of 2005. That compares with 45 percent in 2003 and 41 percent in 2002."