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Freddie Mac seeks $30.8 billion in aid after fourth-quarter loss

March 12, 2009|Associated Press

WASHINGTON — Freddie Mac, facing mounting damage from the U.S. housing crisis, said Wednesday it would ask the government for nearly $31 billion in additional aid after posting a gargantuan loss of more than $50 billion last year.

The report comes just weeks after Fannie Mae, a sister company, said it would need more than $15 billion in government assistance after losing almost $60 billion last year.

The two companies, which were seized by the government last fall, together own or guarantee 31 million home loans worth $5.5 trillion -- more than half of all U.S. home loans.

John Koskinen, a member of Freddie's board of directors, will temporarily replace David Moffett as the top executive, the company said Wednesday. Koskinen is a corporate restructuring expert who directed planning for the year 2000 computer conversion.

The interim CEO has his work cut out for him. Freddie's request for $30.8 billion in federal aid comes on top of $13.8 billion the McLean, Va., company received last year. It was forced to go back because its net worth -- the value of its assets minus the value of its liabilities -- fell below zero.

The recent loss was driven by $13.2 billion in hedged trades, $7.2 billion in credit losses from the declining housing market conditions and $7.5 billion in write-downs of the value of its mortgage-backed securities. The company also took a charge of $8.3 billion for now-worthless tax credits.

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