November 16, 2007 (LPAC)--The stock value of Fannie Mae, which plays the role as owner or guarantor of $2.7 trillion of U.S. mortgage assets, plunged 10% Nov. 15, and by late morning today, fell another 13%, to $37.44. This came out of a suspicion that the mortgage finance company's newly announced accounting figures for write-offs and losses understate the size of losses hitting them. To no avail, Fannie Mae executives held a conference call this morning to defend their statistics, which also involved a change of accounting method. Fannie Mae has reported a loss for the Third Quarter of $1.39 bn.

Founded in 1938, as part of the FDR New Deal effort to supply liquidity for housing, in 1968 the Federal National Mortgage Association--known as Fannie Mae--went private as a GSE--government sponsored enterprise. It is authorized to make and back loans, but it does not have government guarantee. During the years of the Greenspan Home Mortgage Bubble, Fannie Mae came to be a principal player in the market of U.S. mortgages, derivatives and all manner of Bubble instruments. With Fannie Mae falling on its fanny, it is now even more evident that there is no bottom to the collapse, unless there is emergency intervention.