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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (1712)	3/10/2004 2:50:07 PM
From: mishedlo	Respond to of 116555

Fannie Mae acknowledges it has taken losses in its derivatives trading that have not yet been recognised it its earnings, but declines to disclose the amount. The reason, said Jonathan Boyles, vice-president of financial standards and taxes at Fannie Mae, is that "we don't believe it's all that meaningful." A Fannie Mae spokeswoman added that the company typically held its positions to maturity and as such it did not see the losses as material. [We hold to zero or maturity whichever comes first. ggg - until then it does not matter - Trust us - LMAO mish] Next Monday Fannie Mae is due to release its annual "fair value disclosure" -- a statement of the current market value of its derivatives positions. Observers will be watching to see if the gap between the company's regulatory capital and fair value has widened further than the $6 billion shortfall of a year ago. A Financial Times analysis of Fannie's accounts suggests it may have incurred losses on its derivatives trading of $24 billion between 2000 and third-quarter 2003. That figure represents nearly all of the $25.1bn used to purchase or settle transactions in that period. Any net losses will eventually have to be recognised on Fannie Mae's balance sheet, depressing future profits. [If true, this is staggering - mish]

To: Crimson Ghost who wrote (1712)	3/10/2004 4:06:44 PM
From: Rascal	Respond to of 116555

Regulation of Fannie Mae and its sibling Freddie Mac is rapidly moving up the agenda in Washington, amid concerns that the two goverment-sponsored entities have grown so big that they pose a systemic risk to the U.S. financial system. The two entities own or guarantee mortgages totalling $4,000 billion. Definition of systematic risk A risk that influences a large number of assets. Political events are a good example of systematic risk. It is virtually impossible to protect yourself against this type of risk. Rascal @MusicalChairs.com