Teasury may have to pump more than the planned $200 billion into Fannie Mae and Freddie Mac to keep the mortgage giants afloat. Deterioration of the housing market and the broader economy have put the corporations into deeper trouble than they were in when Treasury announced their takeovers. (Source: The Washington Post)
Follow-up: Freddie Mac has a net worth of NEGATIVE $13.7 billion; FNMA still has a positive net worth but said it may be negative by year-end.
Delinquency on subprime mortgages set an all-time record in October as unemployment soared and interest rates reset, driving monthly payments higher. The increase is spreading to the entire mortgage market, as well as auto loans and credit cards. (Source: CNBC)
A further $103 billion of synthetic CDOs are vulnerable to catastrophic losses based on defaults involving underlying derivatives. Defaults by Lehman Brothers and other institutions have already touched off $24 billion in synthetic CDO losses. There is about $750 billion of synthetic CDOs outstanding that are tied solely to corporate-debt derivatives. (Source: Financial Times)
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