Freddie Mac reported a $23.9 billion fourth-quarter 2008 loss on March 11, 2009. The fourth-quarter loss was largely because of an $11.8 billion fair-value, mark-to-market loss on interest rate derivatives, and credit-related expenses of $7.2 billion. We expect, as does Freddie Mac's management, higher credit losses in 2009 than in 2008, for which the company began aggressively building its reserve last year. The company's single-family guaranteed portfolio is deteriorating further, reflecting more delinquencies and transitions, more severe loan losses, and lower estimated recoveries by putting back defaulted loans to sellers and servicers. A widening of credit spreads in the fourth quarter increased fair-value losses and resulted in Freddie Mac's private-label Alt-A and subprime residential mortgage-backed securities taking $7.5 billion of
