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Fannie Mae asks for another $8.4bn bailout after fresh losses

City A.M. Reporter
AMERICAN mortgage finance giant Fannie Mae has asked the US government for a further $8.4bn (£5.6bn) after announcing more big losses.

The company, led by chief executive Mike Williams, said it lost $13.1bn in the first quarter of the year as it continues to suffer the effects of the financial crisis. This compares to a loss of $16.3bn in the last quarter of 2009.

The company said: “Our first-quarter results were driven primarily by credit-related expenses, which remain at elevated levels due to weaknesses in the economy and the housing market.”

The publicly traded Fannie Mae and sibling mortgage finance giant Freddie Mac were seized in a government rescue in September 2008 amid an escalating financial crisis after the collapse of a housing bubble.

Fannie Mae also said it ended the first quarter with a net worth deficit of $8.4bn. To cover the gap, it said the Federal Housing Finance Agency had asked the Treasury to provide this sum by June 30.

So far the government has contributed $83.6bn to the bail-out of Fannie Mae. The cost of bailing out both institutions now totals nearly $145bn – but is expected to total much more.