Wednesday, October 29, 2008

"only if there is a greater than 50 per cent chance that the company will be profitable in the next fiscal year."

Here's a theme you're going hear quite often in the near future. The government investment is going to end up being a big loss. From the FT:

"Fannie Mae
said it would write down “substantially all” of a $20bn tax-related asset that has been a key component of its capital.

The writedown increases the likelihood the US Treasury may have to cough up more capital to keep Fannie and fellow mortgage financier Freddie Mac afloat."

Because:

"If Freddie is forced to write down its deferred tax asset, the Treasury will need to have to make an immediate capital infusion for the mortgage company. Freddie Mac declined to comment."

I wonder why?

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