Fannie Mae Needs $7.8 Billion Because It Bet The Farm On Derivatives

Like the irresponsible son who goes to his daddy asking for money to cover gambling losses so loan sharks don't bust his kneecaps, Fannie Mae is begging taxpayers for $7.8 billion because it lost so much money last quarter on derivatives. The $5.1 billion loss in the third quarter dwarfs last year's awful third quarter shortfall of $1.3 billion.

The Financial Times (registration required) reports declining interest rates led to Fannie Mae's heavy derivatives and securities losses, accounting for $4.5 billion of the debacle.

The U.S. Treasury bailed out Fannie Mae, which guarantees about half of single-family mortgage debt, in 2008. It's important to Fannie Mae that it's been deemed too big to fail, because that way it's able to keep a straight face when asking the government for $111 billion...

http://consumerist.com/2011/11/fannie-mae-needs-78-billion-because-it-lost-its-fanny-betting-on-derivatives.html