Fannie Mae suffers $2.3 billion loss

Losses and Lawsuits

WASHINGTON, DC - US mortgage provider Fannie Mae has posted a second-quarter loss of $2.3 billion, two days after the other government-sponsored mortgage firm, Freddie Mac, announced an $821 million loss for the second quarter. Fannie and Freddie have now lost $14 billion in the four quarters since the onset of the crisis in the US mortgage industry.

The losses have increased media speculation of a potential bailout by the US government. The two enterprises lack formal guarantees, but are unlikely to be allowed to fail. They hold over $5 trillion of the $12 trillion in outstanding US home loans, and the cost of a bailout has been estimated at between $25 billion and $1 trillion - at the taxpayers' expense. Experts expect the US Treasury to buy preferred stocks in Fannie and Freddie within weeks.

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