From Bloomberg:

Fannie Mae posted a record quarterly loss as new Chief Executive Officer Herbert Allison slashed the value of the mortgage-finance provider’s assets by at least $21.4 billion and said it may need to tap federal funds next year.

In its first report since being seized by the U.S. government last month, Washington-based Fannie Mae said its third-quarter net loss was $29 billion, or $13 a share, from $1.4 billion, or $1.56, a year earlier.

Allison, installed last month when the government took over Fannie and its smaller rival Freddie Mac, reduced most of Fannie’s deferred tax credits, increased default estimates and said credit losses will increase. The report signals the new management is taking a dimmer view of Fannie’s financial future than the team under former CEO Daniel Mudd. The worst housing market since the Great Depression already caused Fannie to post losses of $9.4 billion in the past year.

“Delinquencies were up, foreclosures were up, home values continue to decline, then you had the seizing up of the credit markets in October,” said Howard Shapiro, an analyst at Fox- Pitt Kelton Inc. in New York. “It wasn’t very pretty and there are definitely no signs of a bottoming yet.”

Fannie’s new management increased reserves for future credit losses from $3.7 billion last quarter and took a higher- than-expected charge against its $5.2 billion in “temporary” losses.

If there was any more need to see just how bad the real estate market is suffering in the United States, Fannie Mae’s $29 billion loss in the last three months is ample evidence indeed that the housing industry has been absolutely devastated - and that the problems are only increasing and not getting better.

Buerried Treasure, by Banksy, originally uploaded by David Boyle.