Reassuring Words From Freddie Mac

Jun 7th, 2008 @ 3:59 PM by Alden Smith

We hear reassuring words from CEO Richard Syron of Freddie Mac, who has told shareholders that things are going good this year.  His comments were made at a shareholder meeting in McLean, Va.  This, after a year in which its share price was sliced by more than 60%.  Looks to me like a bit of reassurance is indeed in order.

Too bad Wall Street doesn’t agree with Mr. Syron.  Freddie Mac shares fell $1.06, or 4.2%, to $24.23 in morning trading. They are down from more than $65 a year ago.  Syron expects to see revenue growth of 15% to 20% this year.  Obviously, our Mr. Syron doesn’t have a family to feed or a car to drive.

I read an interesting thing on unemployment figures today, and better understand the model used for calculating them.  It is interesting stuff, but does not reflect actual conditions.  The actual figures are quite different.  Many construction jobs are going down the tubes, oil is climbing at an impossible rate, and the cost of living is such that I see people looking for work so that they can afford to buy gas to drive to their regular jobs.  I fail to see how the mortgage market will boom as Mr. Syron proclaims.  He does have the honesty to say, however, that “Weakening housing prices and housing activity have led to a punishing deterioration of credit which has hurt our results, along with those of other market participants.”  It is a bit hard to see encouragement from a CEO when Freddie Mac posted a loss of $3.1 billion last year and lost $151 million in the first quarter of this year.  It looks a bit like catch-up time to me.

I do not see things from the Wall Street vantage point, but rather from good old Main Street, where the average person resides.  This viewpoint doesn’t go well with big business, I am sure, but the reality of the situation is this – we cannot continue on the course we are.  Rosy outlook, indeed!