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DS News Webcast: Wednesday 11/4/2015

Freddie Mac reported a net loss of 475 million dollars for Q3 2015 in its 10-Q filing with the Securities and Exchange Commission on Tuesday, the first time the GSE has reported a quarterly net loss in four years. In the second quarter of 2015, Freddie Mac reported a net income of 4 point 2 billion dollars. The dropoff of 4 point 675 billion dollars in net income from Q2 to Q3 is largely because of income volatility created by the differences between the Enterprise’s accounting associated with its use of derivatives—securities with a price derived from underlying assets—and generally accepted accounting principles.

The loss will not cause Freddie Mac to need another draw from Treasury since it was only a fraction of the 1 point 8 billion dollar net worth reserve the Enterprise has under the Preferred Stock Agreement, according to Layton. The dividends paid into Treasury by Freddie Mac remained unchanged at 96 billion dollars, which is about 25 billion dollars more than the 71 billion the Enterprise received in a taxpayer-funded bailout in 2008.

The U.S. Supreme Court decided to deny the revival of a suit involving allegedly false statements made about toxic mortgage-backed securities by Standard & Poor’s rating agency. The suit was originally brought about by Boca Raton Firefighters & Police Pension Fund shareholders in February 2013 after a lawsuit brought on by the Department of Justice against S&P for its alleged role in the financial crisis. The company settled with the DOJ in February 2015 for 1 point 4 billion dollars.