Fannie, Freddie could send $179.2 billion to taxpayers: White House

WASHINGTON Mon Mar 10, 2014 1:54pm EDT

The headquarters of mortgage lender Fannie Mae is shown in Washington September 8, 2008. REUTERS/Jason Reed

The headquarters of mortgage lender Fannie Mae is shown in Washington September 8, 2008.

Credit: Reuters/Jason Reed

Related Topics

WASHINGTON (Reuters) - U.S. government-owned mortgage financiers Fannie Mae and Freddie Mac could send about $179.2 billion in profits to taxpayers over the next 10 years if the terms of their bailout remain intact, the White House budget office said on Monday.

The amount is more than triple the estimated 10-year payments calculated last year in the White House budget proposal, driven by the companies' increased profitability.

Fannie Mae and Freddie Mac have operated under federal conservatorship since 2008, when regulators agreed to inject capital into the companies to keep them afloat.

They received $187.5 billion in taxpayer funds, but they have returned to profitability and by the end of March they will have had paid $202.9 billion in dividends to the U.S. Treasury.

No one expected them to become profitable again so quickly, but when home prices surged in 2012, they were able to recover more money than expected on soured loans.

The profit projections come in an addendum to President Barack Obama's fiscal 2015 budget proposal. In a budget proposal last year, the administration estimated that Fannie Mae and Freddie Mac would send the Treasury $51 billion through 2023.

Under a 2012 revamp of their bailout terms, Fannie Mae and Freddie Mac send a majority of their profits to the Treasury as dividends, and they are unable to repurchase the controlling share the government took when it bailed them out. Previously, they were required to pay only a 10 percent dividend on their bailout funds in profitable quarters.

Shareholders, including Perry Capital and Fairholme Capital Management, have sued the United States over the changes. They argue that since the companies are returning profits to taxpayers, the government's stake should shrink.

Both Republicans and Democrats in Congress and the Obama administration want to wind down and replace Fannie Mae and Freddie Mac.

(Reporting by Margaret Chadbourn; Editing by Leslie Adler)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (10)
The should remain under federal conservatorship until they have paid back triple their bailout to the Treasury via profits.

Mar 10, 2014 2:09pm EDT  --  Report as abuse
Harry079 wrote:
“Fannie Mae and Freddie Mac could send about $179.2 billion in profits to taxpayers over the next 10 years if the terms of their bailout remain intact”

What a frickin’ scam. The Federal Reserve has been buying $40 billion a month in Mortgage Backed Securities where nearly 90% of those were from Fannie, Freddie and others such a VA and FHA.

The PROFITS should go towards reducing the FED’s $4 trillion balance sheet and NOT turned over to the Treasury which will just spend the money.

Mar 10, 2014 2:09pm EDT  --  Report as abuse
disenwit wrote:
So, these evil companies that caused the housing bubble because of Democrats legislation to make sure all poor people owned a house, starting back with Bill Clinton, are now making an evil profit and are going to have to turn it over to the folks who caused the debacle in the first place? And just what will Obama do with it? Hire another Canadian website construction from Michell’s friend? Or maybe find another Solyndra to give a few hundred million to? Or just what? Give some of it to the folks who have lost their health insurance because of Obamacare? just what will they do with it???

Mar 10, 2014 2:21pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.