When to comes to issuing mortgages, Fannie Mae traffics only in prime mortgages. But it has a double standard when it comes to investing. It had no qualms about investing in lots of loans backed by Alt-A and even subprime loans. And that is coming back to haunt it. It has been in capital raising mode (preferred stock) amid predictions that it will be forced to swallow some big losses. Fortune figures that "if Fannie's bonds are similar to bonds for which price data exists, the company's market losses on these bonds this quarter could exceed $5 billion, which would be 12% of Fannie Mae's capital." Stay tuned.

For more:
- here's the Fortune article