Unsurprisingly the GSE is still a sink hole that cash is proving difficult to fill. Instead of growing out of the training wheels, the increased burden of debt has bent the brackets, cracked the frame and flattened both tires:
Fannie Mae's first-quarter loss ballooned on surging credit losses as the company and the Treasury Department reached agreement on a deal that doubled the government's support level to $200 billion.
The deal, which Fannie said in a filing with the Securities and Exchange Commission was reached Wednesday, has been keeping the company afloat while under conservatorship as credit losses exploded.
Fannie requested another $19 billion Wednesday, which if approved through a preferred-stock purchase would put the total given by the government at $35.2 billion. The stock pays a 10% yield.
This is amusing considering the GSEs are being used as a tool to spike lending and, one is expected to believe, reflate the economy. Expect another large and splashy collapse into a muddy puddle and more than skinned knees this time.
Fannie's Loss Swells; Treasury to Bolster Support [The Wall Street Journal]