Fannie Mae Datapoint of the Day

Peter Eavis, who started the Fannie Mae ball rolling on Wednesday, moves the story further now with this rather startling and scary datapoint:

Using fair value accounting, Fannie Mae's capital -- the company's net worth -- has declined sharply this year. According to a fair value version of its balance sheet contained in a recent filing, Fannie Mae's capital was $34 billion on Sept. 30, a 20% drop from the end of last year.

Now, $34 billion in capital is still a lot of capital. But $8.5 billion is an enormous amount of capital to lose in less than one year – especially when you don't seem to be making any effort to be particularly aggressive in terms of accounting.

Fannie should, by rights, be part of the solution to the subprime crisis; at the moment, it's looking more like part of the problem.