“A look at Freddie Mac’s own accounting statements shows that using the ‘fair value’ method that includes some of their off balance sheet positions, the firm’s net worth is negative $5 billion. Freddie has set aside a total of $14 billion to guarantee a total of $1.8 trillion in loans, enough for a loss rate of just 0.8 percent. Should their loss rate rise to 5 percent, which is conceivable in this housing market, they would be nearly $80 billion under water.”
