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Strategies & Market Trends : Joe Stocks Trader Talk
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To: Joe Stocks who started this subject2/20/2002 4:34:31 PM
From: Joe Stocks   of 787
 
FNM
13:18 ET Fannie Mae calls WSJ editorial egregious (FNM) 75.93 -2.52: -- Update -- Co calls WSJ editorial egregious in its disregard for the facts. Among the "errors, misstatements, and distortions" FNM specifically refutes include 1) size of debt is overstated by more than $1 trillion, 2) leverage is overstated by a factor of 100%, 3) statement that it has cut back on use of credit insurance is incorrect, 4) claim about write-down of shareholder equity is a gross mischaracterization of a well-known effect of implementing the new FAS 133 accounting standard

08:51 ET Fannie Mae and Freddie Mac compared to Enron in WSJ editorial (FNM) 78.45: WSJ editorial compares "government-sponsored" mortgage entities Fannie Mae and Freddie Mac (FRE) to Enron, based on 1) increasing dependence on derivatives, 2) 60 to 1 debt to equity (5x avg bank), 3) interest rate risk, 4) suspect financial disclosure. Worth noting that WSJ penned article earlier this month reporting that FNM and FRE needed to convince skittish investors that their hard-to-decipher financial statements and heavy use of volatile derivatives are not new sources of risk in the post-Enron/Tyco era. Neither stock experienced any meaningful reaction to the Feb 7 story.
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