Tuesday, November 20, 2007

Next Up

Freddie Mac - come on down! AP (11.20.07):
"Freddie Mac set aside $1.2 billion in the third quarter to account for bad home loans and the company posted a $2 billion loss Tuesday amid a worsening mortgage crisis.

Losses for the nation's second largest guarantor of home mortgages widened from $715 million last year during the same period."

$2 Billion Freddie Mac Loss

"Freddie Mac said it made the provision for credit losses in the July-September period because of defaults on home loans, which 'reflects the significant deterioration of mortgage credit.'"

Fear not, however. Freddie Mac's CFO Buddy Piszel sez things will be better. "'We have begun raising prices, tightened our credit standards and enhanced our risk management practices,' Piszel said. 'We also continue to improve our internal controls.'"

And just never you mind that stuff about the horse and the barn door.

Meanwhile, back at the ranch. Bloomberg (11.20.07):

"The risk that banks and brokerages from Citigroup Inc. to Bear Stearns Cos. will default on their debt is accelerating as analysts increase their estimates of losses from subprime mortgages, credit-default swaps show.

Contracts on New York-based Citigroup, the largest U.S. bank by assets, rose 12 basis points to 91 basis points yesterday, according to broker Phoenix Partners Group, setting a record for the sixth time this month."

Citigroup, Bank Credit Swaps Rise on Subprime Concern

"Contracts on New York- based Bear Stearns climbed 23 basis points to 173 basis points, about a six-year high. A rise signals investors are less confident in a company's creditworthiness."

A lot less confident in this case.

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