Fannie Mae Needs More Cash

Fannie Mae wants another $1.5 billion in aid from the federal government as the mortgage giant reported losing $3.13 billion in the April-to-June period.

That's the 12th straight quarterly loss for Fannie Mae. The losses take into account $1.9 billion in dividends paid to the Treasury Department. They compare with a loss of $15.2 billion, or $2.67 a share, in the same quarter a year ago.

But Fannie Mae is asking for less money from the government than expected, a sign that the cost for bailing out the mortgage giant could be billions lower than once thought.

The government-controlled mortgage buyer has now set aside enough money to cover the majority of losses stemming from bad loans made from 2005 through 2008, it said.

But even if the news continues to be bad from Fannie and its fellow government-controlled lender, Freddie Mac, Federal Reserve boss Ben Bernanke said such blows wouldn't be the end of the mortgage market.

"There are a variety of organizational forms that might replace Fannie Mae and Freddie Mac that could likely provide mortgage credit without the systemic risks associated with these institutions in the past," he said in a letter to Rep. Marcy Kaptur that was released on Friday, according to Reuters.

Read more: http://www.portfolio.com/business-news/reuters/2010/08/06/bernanke-many-ways-to-replace-fannie-and-freddie#ixzz0vqIBBxeS

More details on Fannie Mae's losses are available from the Washington Business Journal.