The companies guarantee or own nearly half of all U

The McLean, Virginia-based company said late Friday itmay have to seek up to $35 billion in capital from theTreasury in the form of senior preferred stock. Expectations of larger losses underscore the importance ofthe Obama administration's measures to halt foreclosures thatare feeding a downward spiral in the housing market, alreadyin its worst downturn since the Great Depression. Until thedeclines in house prices are broken, the cycle will continueand the economic recession could get worse, economists havesaid. Fannie Mae (FNM.P), Freddie's larger rival, will probablyneed $5 billion to $10 billion to maintain its net worth as ofDec. 31, but it is more exposed to losses throughout 2009 fromits other business of guaranteeing loans in mortgage-backedsecurities, according to analysts, including Rajiv Setia ofBarclays Capital in New York.

"Since Fannie Mae doesn't really have as large a'non-agency' mortgage-backed portfolio as Freddie Mac, theimpact of the markdowns will likely be lower" last quarter,Setia said in an e-mail. "However, losses from the guarantybook will likely be larger." DANGER IN DERIVATIVES HEADWIND Freddie Mac and Fannie Mae, based in Washington, haveprovisioned for just a third of cumulative losses onguarantees of $45 billion and $80 billion, respectively, hesaid. The companies guarantee or own nearly half of all U.S.mortgages. After taking about $14 billion from the Treasury lastyear, Freddie Mac would be using about half of its $100billion Treasury lifeline. Fannie Mae and Freddie Mac are also fighting a headwind ofunrealized losses on interest-rate derivatives they use tohedge their mortgage portfolio, Moshe Orenbuch, a strategistat Credit Suisse, said in a research note on Monday. What's more, prospects of legislation that would make iteasier for a bankruptcy judge to tear up mortgage contractshas hit the value of securities held by the companies, hesaid.

That could add $20 billion to the Treasury's costs ofbuoying the companies, he added. The value of holdings of "conventional" mortgages shouldprovide some offset to losses elsewhere, analysts said.Growing portfolios also suggest rising interest income. Treasury injections will likely keep the companiesoperating as government entities for years, as they struggleto service costs and provide money for U.S housing, Setiasaid in a conference call last week. Before theconservatorships, Fannie Mae and Freddie Mac operated asquasi-governmental "agencies," where they relied on chartersfrom Congress, but answered to shareholders. (Reporting by Al Yoon; Editing by Jan Paschal) Stocks Regulatory News Bonds.

The Georgia Bulldogs are in desperate need of a running game. Much has been made of the problems the offensive line have had this year. I, for one, think a great deal of our difficulty running the ball can be laid at the feet of our tight ends and fullbacks not blocking as well as we have grown acustomed to.Richard Samuel failed to convert a third-and-one on the opening drive At least that is how the coaches reacted to it. From what I saw, the fullback was essentially blown up in the hole and his man initiated contact with Richard behind the line of scrimmage.