This is getting nearly close to being miraculous regarding the earnings revival of McLean, VA Headquartered Freddie Mac.
First, here's the history of Freddie Mac's Audited Annual Pretax Losses after the horrible housing crisis and financial meltdown occurring in 2008.
2008 Annual Pretax Loss.....$44,564 mil (yeah, that's $44.6 bil)
2009 Annual Pretax Loss.....$22,384 mil
2010 Annual Pretax Loss.....$14,882 mil
2011 Annual Pretax Loss.......$5,666 mil
So yeah, these losses have been sharply declining, but still these are monstrous losses, and how can US taxpayers, who must cover all of Freddie Mac's losses, ever expect that Freddie Mac will start being profitable again.
Enter 2012, and a ray of hope. Check out these Pretax Income (PTI) numbers.
...1Q 2012 PTI $563 mil vs. 1Q 2011 PTI $602 mil, thus down $39 mil, but still a profit.
Then comes the 2Q 2012, and a near miracle on the Pretax Income (PTI) and Pretax Loss (PTL) front:
...2Q 2012 PTI $2,944 mil vs. 2Q 2011 PTL $(2,371) mil, an earnings improvement of an incredible $5,315 mil.....Whoa!
But then to give more credence to that near miraculous 2Q 2012 massive earnings turnaround, just check out these just released 3Q 2012 Pretax Income (PTI) and Pretax Loss (PTL) numbers:
...3Q 2012 PTI $2,626 mil vs. 3Q 2011 PTL $(4,478) mil, an earnings improvement of an even more incredible $7,104 mil.....yeah, that's $7.1 bil of earnings improvement in just the 3Q 2012 and a total of $12.4 bil earnings improvement for the 3Q 2012 and the 2Q 2012 combined.
So, what's driving this earnings improvement in the 3Q 2012?
Well, it's two things.
First, Freddie Mac was able to reduce its Provision for Loan Losses hit to Earnings from $3,606 mil reported in the 3Q 2011 to only $610 mil in the 3Q 2012.
Well, that's really good, but here's something even better.
And second, Freddie was also able to reduce its Derivative Losses (yeah, that dirty word again, which caused the 2008 Financial Meltdown, and is still playing havoc on US housing, on the US economic recovery, on US unemployment, and on US underemployment) were reduced from $4,752 mil in the 3Q 2011 to only $488 mil in the 3Q 2012.
Some people at Freddie Mac and in the US Government need to be
sincerely thanked for what they accomplished here in 2012. I think it's even better than how AIG has turned around from its 2008 economic crater. No one was expecting that either.
Let's hope this great earnings news can continue at Freddie Mac.
And let's also hope that Fannie Mae can follow in Freddie Mac's earnings turnaround footsteps. I think they will.
