New heads for Freddie Mac after $50 billion losses

US government-supported mortgage buyer Freddie Mac has named its new chairman and chief executive, after reporting a loss of $50.1 billion for 2008.

Chief executive David Moffett resigned earlier this month, and will step down by the end of this week. Replacing him as interim chief executive is the current non-executive chairman, John Koskinen. The new interim chairman will be Robert Glauber, a director of Freddie Mac since 2006, and former chairman of the National Association of Securities Dealers.

The company also announced a net loss of $50.1 billion for 2008; the fourth quarter alone saw $23.9 billion losses, which Moffett blamed on "mark-to-market items and credit-related expenses". Freddie Mac marked down its derivatives portfolio by $13.6 billion and its guarantee assets by $5.3 billion last year, as well as making $17.7 billion impairments on its securities holdings. Another $17.5 billion went on credit- related expenses, including provisions for credit losses, the company said.

Fellow government-sponsored entity Fannie Mae reported 2008 losses of $58.7 billion. Both companies entered government conservatorship, overseen by the Federal Housing Finance Agency, in September last year, and are now heavily dependent on support from the US Treasury and Federal Reserve. So far, they have received promises of up to $200 billion in preferred stock purchases, secured lending facilities, and mortgage-backed security purchase programmes. The company says there is no sign of an exit from government protection - and it remains possible both will be broken up and cease to exist.

But the companies' political importance militates in favour of their survival, at least in the short term - the Treasury doubled its promised investment in each from $100 billion to $200 billion as part of an effort to support the US housing market, replace lost mortgage lending capacity and prevent a wave of foreclosures as the US slips deeper into recession.

See also: Freddie Mac CEO resigns
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