Reply #1: Fannie and Freddie, what a pair. Didn't Fannie recently put off reporting

[54anickel]

their derivatives again? Sheesh, and Greenspan doesn't want them regulated by the SEC.

http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=4869824

NEW YORK, April 19 (Reuters) - Fannie Mae delayed the release of closely watched balance sheet and derivatives disclosures on Monday, citing the difficulty of preparing the information and its desire to explain it more fully in an upcoming regulatory filing.

Fannie Mae (FNM.N: Quote, Profile, Research) said it will release information on losses from derivatives used to hedge swings in interest rates and the impact on stockholders' equity, among other disclosures, in its quarterly filing with securities regulators in about three weeks.

Fannie Mae previously had included some details of its derivative losses and total stockholders' equity in a report of "selected financial information" released each quarter, along with its earnings statement.

The future impact of most derivatives on earnings -- seen in a balance sheet line item known as "accumulated other comprehensive income," or AOCI -- has received a lot of attention recently from critics who charge the company has downplayed potentially big losses, either from bad bets or poor interest-rate hedging.

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While we're on the subject

http://www.investors.com/breakingnews.asp?journalid=21066849&brk=1

Fed's Poole worried about risk of crisis from housing GSEs

WASHINGTON (CBS.MW) - The capital positions of Fannie Mae and Freddie Mac and their quasi-government status remain a lingering threat to financial markets, William Poole, the president of the Federal Reserve Bank of St. Louis, said Thursday.

In an address to a banking conference sponsored by the Federal Reserve Bank of Chicago, Poole, a frequent critic of the housing government-sponsored enterprises, or GSEs, sharpened his previous attacks on the firms.

A copy of his remarks was made available in Washington.

He argued that, underneath all of the complicated accounting and complex derivative strategies, the problem of Fannie Mae (FNM) and Freddie Mac (FRE) boils down to a simple fact - the firms pursue a strategy of borrowing short and lending long with a thin capital margin.

"In my opinion, GSE capital positions are undesirably thin and leave these firms unnecessarily vulnerable to surprise shocks," Poole said.

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