The Corporate Law Group

Fannie Whoa!

We recently had the distinct displeasure of reading the Annual Report on Form 10-K for Fannie Mae for 2008. The words sounded like any other annual report, but it read more like a horror story. Somehow they managed to bury $60 billion after losing just two and half billion a year ago and making three and a half billion in 2006. Retained earnings went from 33 billion to a loss of 26 billion. Stockholders’ equity went from 44 billion to negative 15 billion. Short term debt increased by $100 billion. There were a million shares of senior preferred stock outstanding at the end of 2008 at $1,000 per share, but none at the end of 2007. Guess who owns that? Right; you do. Of course there is a long discussion of its conservatorship since September 6, 2008. The conservator is the Federal Housing Finance Agency. Of course the conservator is delegating to Fannie Mae’s Board of directors and management the actual day to day management, so not much has changed. One ray of hope—Deloitte & Touche has lowered their auditing fees from $47 million to $39 million.
Paul Marotta

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