Freddie Mac's net interest income and management and guaranteeincome of $2.7 billion were swamped by its non-interest losses of$12.1 billion, the bulk of which were a $9.1-billion impairment ofits securities. It also took a hit from $6 billion in credit lossesand a $1.1 billion loss on loans to Lehman Bros.

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This report, coupled with Fannie Mae's $29-billion quarterlyloss, reported on Monday, are raising questions as whether theterms of the conservatorship are working for the GSEs. There havebeen calls for a loosening of terms--much like the way AIG's bailout wasrestructured. Equally loud, though, are those voices calling forreanalysis of the GSEs' role in mortgage finance and whether it isworthwhile to salvage their operations.

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For more on the bailout, check out:
Real Estate Forum's:
"Can $700 Billion Unclog the CreditSpigot?"

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