Altes Elliott-Wellen-Forum - Franklin Raines(FNM): Zinsansteig ein"hundred-year storm"

kingsolomon

31.07.2003, 00:37

Franklin Raines(FNM): Zinsansteig ein"hundred-year storm"

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-->Fannie Mae CEO-Freddie accounting woes raise rates
Wednesday July 30, 5:27 pm ET
By Mark Felsenthal

WASHINGTON, July 30 (Reuters) - The top official of mortgage finance company Fannie Mae (NYSE:FNM - News) said on Wednesday accounting problems at sibling Freddie Mac (NYSE:FRE - News) have seriously marred the companies' public images and raised interest rates for home buyers.

"It's been devastating to the reputation of these firms and I think it has caused material harm to consumers, because we've seen the uncertainty injected into the capital markets, and that uncertainty takes the form of higher interest costs," Fannie Mae Chairman and Chief Executive Franklin Raines told a press conference.

He also said a recent rapid rise in long-term interest rates, as expectations of an economic recovery have picked up, has been a"hundred-year storm" and represents a major challenge for the mortgage finance industry.

Raines said his company expects mortgage originations to fall substantially by the end of the year. He said his company is revising down its 2003 forecast for mortgage originations to $3.4 trillion from $3.7 trillion.

However, Raines said his company -- and others in the mortgage industry -- are well hedged against rising long-term interest rates.

Raines also said he is not aware of any policy change by the European Central Bank with regard to member holdings of debt issued by Fannie Mae, Freddie Mac or other U.S. agencies.

However, he said he would not be surprised if a conservative investor like the ECB would curtail agency debt holdings in light of the accounting scandal that caused Freddie Mac to replace its top three managers last month.

"That would be quite consistent for someone who is managing that type of portfolio," he said.

Raines said that as a result of turmoil at Freddie Mac, lawmakers have told him they want assurances of strong regulatory oversight of the companies, but are not interested in changing their missions of expanding homeownership or their congressional charters, which grant the companies certain advantages to support their missions.

An accounting probe revealed that Freddie Mac had massaged its books to push earnings into the future. The company said last month it would restate earnings upward by $1.5 billion to $4.5 billion.

Raines called on the Bush Administration and on Congress to resolve quickly uncertainties about regulation of Fannie Mae and Freddie Mac, which are known as government-sponsored enterprises because of their charters.

After Freddie Mac's accounting woes became public, members of Congress faulted government supervision of the companies -- which owned or had guaranteed 44 percent of the $6.7 trillion in U.S. mortgage debt as of last year --and proposed moving oversight to the Treasury Department and giving the new regulator more funding and broader powers.

Raines said his company faced similar accounting concerns as Freddie Mac, but had handled them differently. Both companies had to adjust to changes in accounting for derivatives, but Fannie Mae reported results with greater volatility, while Freddie Mac tried to hide swings.

"They tried to reduce the volatility. We reported and explained the volatility," Raines said in a statement posted on the company's Web site.

He said Fannie Mae had not used specific types of derivatives that Freddie Mac's report said the company had developed for the express purpose of pushing a flood of earnings into future periods. He said every derivative Fannie Mae used had first been approved by accountants.

Fannie Mae's stock edged up 1.4 percent to $63.88 while Freddie Mac shares drifted down less than 0.5 percent to $49.15 percent in trading on the New York Stock Exchange (News - Websites).

Freddie Mac stock has fallen about 21 percent since the company's management shake-up in early June. Fannie Mae shares are down more than 14 percent in the same period.

Chrizzy

31.07.2003, 02:09

@ kingsolomon

Re: Franklin Raines(FNM): Zinsansteig ein

-->>Fannie Mae CEO-Freddie accounting woes raise rates
>Wednesday July 30, 5:27 pm ET
>By Mark Felsenthal
>WASHINGTON, July 30 (Reuters) - The top official of mortgage finance company Fannie Mae (NYSE:FNM - News) said on Wednesday accounting problems at sibling Freddie Mac (NYSE:FRE - News) have seriously marred the companies' public images and raised interest rates for home buyers.
>"It's been devastating to the reputation of these firms and I think it has caused material harm to consumers, because we've seen the uncertainty injected into the capital markets, and that uncertainty takes the form of higher interest costs," Fannie Mae Chairman and Chief Executive Franklin Raines told a press conference.
>He also said a recent rapid rise in long-term interest rates, as expectations of an economic recovery have picked up, has been a"hundred-year storm" and represents a major challenge for the mortgage finance industry.
>Raines said his company expects mortgage originations to fall substantially by the end of the year. He said his company is revising down its 2003 forecast for mortgage originations to $3.4 trillion from $3.7 trillion.
>However, Raines said his company -- and others in the mortgage industry -- are well hedged against rising long-term interest rates.
>Raines also said he is not aware of any policy change by the European Central Bank with regard to member holdings of debt issued by Fannie Mae, Freddie Mac or other U.S. agencies.
>However, he said he would not be surprised if a conservative investor like the ECB would curtail agency debt holdings in light of the accounting scandal that caused Freddie Mac to replace its top three managers last month.
>"That would be quite consistent for someone who is managing that type of portfolio," he said.
>Raines said that as a result of turmoil at Freddie Mac, lawmakers have told him they want assurances of strong regulatory oversight of the companies, but are not interested in changing their missions of expanding homeownership or their congressional charters, which grant the companies certain advantages to support their missions.
>An accounting probe revealed that Freddie Mac had massaged its books to push earnings into the future. The company said last month it would restate earnings upward by $1.5 billion to $4.5 billion.
>Raines called on the Bush Administration and on Congress to resolve quickly uncertainties about regulation of Fannie Mae and Freddie Mac, which are known as government-sponsored enterprises because of their charters.
>After Freddie Mac's accounting woes became public, members of Congress faulted government supervision of the companies -- which owned or had guaranteed 44 percent of the $6.7 trillion in U.S. mortgage debt as of last year --and proposed moving oversight to the Treasury Department and giving the new regulator more funding and broader powers.
>Raines said his company faced similar accounting concerns as Freddie Mac, but had handled them differently. Both companies had to adjust to changes in accounting for derivatives, but Fannie Mae reported results with greater volatility, while Freddie Mac tried to hide swings.
>"They tried to reduce the volatility. We reported and explained the volatility," Raines said in a statement posted on the company's Web site.
>He said Fannie Mae had not used specific types of derivatives that Freddie Mac's report said the company had developed for the express purpose of pushing a flood of earnings into future periods. He said every derivative Fannie Mae used had first been approved by accountants.
>Fannie Mae's stock edged up 1.4 percent to $63.88 while Freddie Mac shares drifted down less than 0.5 percent to $49.15 percent in trading on the New York Stock Exchange (News - Websites).
>Freddie Mac stock has fallen about 21 percent since the company's management shake-up in early June. Fannie Mae shares are down more than 14 percent in the same period.

also, ich hab ja hier lange nix mehr gesagt, und die alte Fannie hab ich auch auf der watch, aber ich meine, wir sollten den crash mal noch a weng verschieben.

die wiederholten Medungen der hinlänglich (zumindest unter uns) bekannten Schieflagen wird dies nicht ändern.

LG,

crissy