Today, Freddie Mac reported a $23.9 billion loss for the fourth quarter of 2008 and a $50.1 billion loss for the full year, resulting in a $30.7 billion net worth deficit as of December 31, 2008. Similar to the losses reported by Fannie Mae two weeks ago, Freddie Mac's results mark the sixth straight quarter of losses, though slightly less than the $25.3 billion loss it reported in the third quarter of 2008. Freddie Mac stated that its fourth quarter results were driven primarily by net mark-to-market losses of $13.3 billion on its derivatives portfolio, guarantee assets and trading securities due to the impacts of spreads widening and interest rates declining, $7.2 billion in credit-related expenses related to continued deterioration in economic conditions during the fourth quarter, and security impairments on its available-for-sale securities portfolio of $7.5 billion primarily due to sustained deterioration in the performance of the underlying collateral on its non-agency mortgage-related securities.
As Freddie Mac preliminarily announced this past January, the Director of the Federal Housing Finance Agency, who serves as conservator for Freddie Mac, has submitted a request to Treasury on Freddie Mac's behalf for $30.8 billion in funding under the terms of last year's Senior Preferred Stock Purchase Agreement (Purchase Agreement). Freddie Mac "[e]xpects to receive such funds" this month. Treasury's agreement was established when Freddie Mac was placed into conservatorship in September 2008, and Treasury's preferred stock commitments were increased from $100 billion to $200 billion as part of the Homeowner Affordability and Stability Plan unveiled in January. This will be the second time Freddie Mac will have tapped Treasury funding under the Purchase Agreement.
In its Form 10-K filing with the SEC on Thursday, Freddie Mac stated that given the conservatorship, "[i]t is likely that our business model and strategic objectives will continue to change, possibly significantly, including in pursuit of public policy and other non-financial objectives. … Accordingly, our strategic and operational focus going forward may not be consistent with the investment objectives of our investors."
Earlier today, Freddie Mac named John A. Koskinen interim chief executive and Robert R. Glauber interim non-executive chairman. The move came just over a week after Freddie's CEO, David Moffett, resigned after only six months on the job.