Fannie Mae 2009 Annual Report Download - page 114

some large loans, lower property values, and weaker financial results from borrowers, all of which are a
reflection of the weak economy. Net charge-offs and foreclosed property expenses totaled $220 million in
2009 compared with $52 million in 2008.
• The net tax provision recognized in 2009 was attributable to the reversal of the use of certain tax credits,
net of our ability to carryback current tax losses. In addition, we recorded a valuation allowance for all of
the tax benefits associated with the tax credits generated by our partnership investments in 2009. We
recorded a non-cash charge in 2008 to establish a partial deferred tax asset valuation allowance against
our net deferred tax assets.
Key factors affecting the results of our HCD business for 2008 compared with 2007 included the following:
• Increased guaranty fee income, attributable to growth in the average multifamily guaranty book of
business, an increase in the average effective multifamily guaranty fee rate and the accelerated
amortization of our deferred guaranty obligation due to the decline in interest rates. The increases in our
book of business and guaranty fee rate reflected the increased investment and liquidity that we provided
to the multifamily mortgage market in 2008.
• A decrease in other income, primarily attributable to lower multifamily fees due to a reduction in
multifamily loan prepayments during 2008.
• An increase in losses on partnership investments. We discuss details on losses from partnership
investments in “Consolidated Results of Operations—Losses from Partnership Investments.”
• A non-cash charge in 2008 to establish a partial deferred tax asset valuation allowance against our net
deferred tax assets. As a result of the partial deferred tax valuation allowance, we did not record tax
benefits for the majority of the losses we incurred during 2008. The allocation of this charge to our HCD
business largely resulted in a provision for federal income taxes of $511 million for 2008. In comparison,
we recorded a tax benefit of $1.5 billion for 2007, driven by tax credits of $1.0 billion.
Capital Markets Group
Table 20 summarizes the financial results for our Capital Markets group for the periods indicated.
Table 20: Capital Markets Group Results
2009 2008 2007 2009 vs. 2008 2008 vs. 2007
For the Year Ended December 31, Variance
(Dollars in millions)
Statement of operations data:
(1)
Net interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . $14,275 $ 8,664 $ 4,620 $ 5,611 $ 4,044
Investment gains (losses), net . . . . . . . . . . . . . . . . . . . . 1,460 (174) 11 1,634 (185)
Net other-than-temporary impairments . . . . . . . . . . . . . (9,861) (6,974) (814) (2,887) (6,160)
Fair value losses, net. . . . . . . . . . . . . . . . . . . . . . . . . . (2,811) (20,129) (4,668) 17,318 (15,461)
Fee and other income, net . . . . . . . . . . . . . . . . . . . . . . 319 264 313 55 (49)
Other expenses
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,446) (2,209) (1,916) (237) (293)
Income (loss) before federal income taxes and
extraordinary losses, net of tax effect . . . . . . . . . . . . 936 (20,558) (2,454) 21,494 (18,104)
Benefit (provision) for federal income taxes . . . . . . . . . (79) (8,450) 1,120 8,371 (9,570)
Extraordinary losses, net of tax effect . . . . . . . . . . . . . . — (409) (15) 409 (394)
Net income (loss) attributable to Fannie Mae . . . . . . . . . $ 857 $(29,417) $(1,349) $30,274 $(28,068)
(1)
Certain prior period amounts have been reclassified to conform to the current period presentation.
(2)
Consists of debt extinguishment losses, allocated guaranty fee expense, administrative expenses and other expenses.
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