Fannie Mae (FNM.P) Thursday reported a $25.2 billion Q4 loss, and said it needs $15.2 billion under a senior preferred stock purchase agreement with the Treasury to fund a deficit in its net worth. In an article yesterday it was reported that Fannie Mae’s Q4 loss was 7X its loss in Q4 2007, and that it lost $58.7 billion in calendar 2008. The article quotes a Fannie Mae spokesperson as saying “We expect the market conditions that contributed to our net loss for each quarter of 2008 to continue and possibly worsen in 2009, which is likely to cause further reductions in our net worth”. The article also said that “Fannie Mae said the deterioration in housing and credit markets reduced the fair value of its net assets to a negative $105.2 billion in December from $35.8 billion at the end of 2007”.

My Comments: I summarized this article simply because I think it is an important bit of news. Those readers who have been reading my blog posts on a regular basis will know that while I would not have been able to predict the quantum of Fannie Mae’s now reported Q4 2008 losses that directionally I expected them. I also expect such losses to continue and likely escalate going forward. If I am right this will mean that the U.S. Government (read the U.S. taxpayer) will be required to fund more Fannie Mae losses going forward.

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