Saturday, September 20, 2008
Big 87654 CFOs-Feh
"We hold capital well in excess of regulatory requirements. Our liquidity position remains strong, and we have reported strong revenue growth in our mortgage-investment and guarantee businesses. ... Yet, Barron's seems to be arguing that all these facts should be disregarded, instead looking only at Freddie Mac's fair-value balance sheet to ascertain our financial condition. Freddie Mac is a buy-and-hold investor--we invest in mortgages with the intent of holding them to maturity. So today's mortgage valuations are less relevant a measure of our financial condition, especially given the highly subjective nature of these valuations in today's unsettled market", Buddy Piszel (BP) letter to Barron's, 8 September 2008.
Who is BP? Freddie Mac's (FRE) Executive VP and CFO. BP's letter appeared in Barron's on Saturday, 6 September 2008. Did anything happen to FRE shortly thereafter? IA is very impressed with BP, but not favorably. See my 26 May 2008 post, http://skepticaltexascpa.blogspot.com/2008/05/gses-and-their-cfos.html.