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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (18394)	3/10/2004 12:24:16 PM
From: TheStockFairy	Respond to of 306849

Fannie Mae faults Financial Times report on losses Wednesday March 10, 11:18 am ET WASHINGTON, March 10 (Reuters) - Fannie Mae (NYSE:FNM - News), the No. 1 source of U.S. mortgage finance, said on Wednesday a Financial Times report that the company may have suffered losses from derivatives is erroneous and "a gross misrepresentation." The newspaper reported on its front page on Wednesday that the government-sponsored enterprise may be able to recoup only a small portion of $25.1 billion it spent on derivatives transactions in a period of just under four years. The newspaper said its own analysis shows the company may have incurred losses of $24.0 billion on its derivatives trading between 2000 and the third quarter of 2003. Those liabilities have yet to be reflected in Fannie Mae's earnings statements or in its regulatory minimum capital standard, the report said. Fannie Mae investor relations Senior Vice President Jayne Shontell said the report is based on "wholly invented" methodology. "(The reporter's) calculation and methodology are flawed and the subsequent implications are wrong. The methodology he employed incorrectly calculated unrealized losses, and as a result he arrived at an erroneous conclusion," Shontell said in a statement. The Financial Times could not immediately be reached for comment. Fannie Mae and mortgage finance sibling Freddie Mac (NYSE:FRE - News) are under scrutiny in Congress after an accounting scandal at Freddie Mac in 2003. Fannie Mae also reported an error in its third-quarter earnings that did not require a restatement. Freddie Mac was fined $125 million by its regulator, but lawmakers say supervision was weak and they are contemplating stiffening oversight of the enterprises and the 12 regional Federal Home Loan Banks. Federal Reserve Chairman Alan Greenspan recently said the size and growth of Fannie Mae and Freddie Mac -- which he said stand behind $4 trillion in U.S. mortgages -- are likely to pose risks to the U.S. financial system if their expansion goes unchecked. Fannie Mae and Freddie Mac shares fell at the market opening but then rebounded. Fannie Mae was down 0.12 percent at $76.96 in morning trading on the New York Stock Exchange (News - Websites) , while Freddie Mac rose 0.16 percent to $62.87. Bond traders said there was some moderate selling of agency debt overnight sparked by the FT article, but spreads came back to little changed following Fannie Mae's denial. biz.yahoo.com