Thursday May 6, 2010
WASHINGTON (AFP) - – Troubled US government-backed mortgage firm Freddie Mac on Wednesday asked for an additional 10.6 billion dollars from the Treasury Department to cover losses.
Announcing a 6.7 billion dollar loss in the first quarter, Freddie Mac said it would need the new funding by June 30 this year.
The Washington-area company has already received more than 50 billion dollars in taxpayers cash to cover losses from toxic assets.
It warned that further demands would be on the way: "Freddie Mac expects to request additional draws," the firm said in a statement.
"The size and timing of such draws will be determined by a variety of factors that could adversely affect the company's net worth."
In 2008, the government pledged to ensure that Freddie Mac, and its larger sister organization Fannie Mae, kept a "positive net worth."
The deal was designed to prop up the vital US housing market from collapsing totally and pushing the economy over the precipice.
But in a sign that the US housing sector is still in difficulty, Freddie said the percentage of its loans not paid on time or in full rose to 4.13 percent in the first three months of the year.
In the final three months of last year the rate stood at 3.98 percent.
The future of Fannie and Freddie has become the latest bone of contention between Democrats who argue they must remain government-backed to aid low-income housing and Republicans who advocate their privatization.
In March, Treasury Secretary Timothy Geithner swatted aside pressure for a swift reform of the mortgage giants as data pointed to a still struggling real estate market.
Geithner told Congress any restructuring of Fannie Mae and Freddie Mac, which received a 100-billion-dollar-plus government bailout at the height of the housing crisis, "must be done as part of a reform of the wider housing finance system."
Geithner argued reforms would "take several months" to develop and should only be "enacted and executed at a time of greater market stability."