Troubled housing lender Freddie Mac posted its fourth consecutive quarterly loss and performed even worse than expected by analysts.
The federally backed company reported a net loss of $821 million, or $1.63 per share, in the second quarter of 2008 compared to net income of $729 million, or $0.96 per share, in the second quarter of last year. Freddie Mac also said it had made provision for credit losses of $2.5 billion, compared to $1.2 billion for the first quarter of 2008, reflecting increases in delinquency rates, foreclosures and the estimated severity of losses driven by continued declines in home prices.
The president signed a bill last week that bails out Freddie Mac and the other government-sponsored housing enterprise, Fannie Mae, as well as establishing a tougher regulatory agency to oversee them (see Bush Signs Housing Rescue Bill).
The company plans to cut its third-quarter dividend and try to raise new capital. "While we expect continued housing and economic weakness will affect our overall performance this year, we continue to maintain a surplus over all regulatory capital requirements," said Freddie Mac chairman and CEO Richard Syron in a statement. "We remain committed to raising $5.5 billion of new capital and will evaluate raising capital beyond this amount depending on our needs and as market conditions mandate."
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