Fannie Hits The Toilet In Q2

Fannie Mae says it lost $2.3 billion, or $2.54 a share, for the quarter that ended June 30. The loss compares with profit of $1.95 billion, or $1.86 a share, in the period last year.

Analysts surveyed by Thomson Financial had expected a loss of just 68 cents a share.

Fannie lost $2.51 billion, or $2.57 per share, in the first quarter of 2008.

CEO Mudd says things are going from bad to worse:

Volatility and disruptions in the capital markets became even more pronounced in
July. In addition, credit performance has continued to deteriorate and, based on
our experience in July, we anticipate further increases in our combined loss
reserves.

Fannie also cut its dividend, for the second time this year , this time by 86% to five cents a share, a move expected to save the company $1.9 billion in capital through 2009.