WASHINGTON, March 16 (UPI) -- U.S. mortgage guarantor Fannie Mae says its losses on one type of derivative used to hedge interest-rate risks in 2003 were $6.9 billion.
The disclosure of the nearly $7 billion loss, which underscores the risks of the government-sponsored mortgage lender takes using derivatives, came after pressure from analysts and politicians for clarity about results from derivatives activity.
The figure is not expected to imperil Fannie Mae's financial position. The company had net income of $7.9 billion in 2003, the Wall Street Journal reported Tuesday.
The company seeks to allay criticism as Congress considers legislation to tighten regulatory control over Fannie and its smaller rival, Freddie Mac.
Some worry the two companies have grown so big and are subject to so much interest-rate risk, taxpayers someday would have to bail them out.
Fannie's losses on derivatives will be apportioned to the company's annual results gradually over the original expected lifetimes of the hedging instruments.
