WASHINGTON, March 18 U.S. housing finance
companies Fannie Mae and Freddie Mac could require more bailouts
from U.S. taxpayers as risks are rising due to shrinking
reserves, an internal watchdog for the firms' regulator said on
Washington bailed out the two firms in 2008 at the height of
the financial crisis and has since seized all their quarterly
profits while demanding the firms reduce their capital buffers.
"Future profitability is far from assured," Federal Housing
Finance Agency Office of Inspector General said in a report,
pointing out that the firms could again chalk up losses on their
derivatives portfolios, similar to those they reported in the
"(This) increases the likelihood of additional Treasury
investment," the report stated.
Fannie Mae's chief executive issued the same warning in
February when the firm announced it would make its smallest
payment to taxpayers in more than four years.
The possibility of another taxpayer draw raises pressure on
the U.S. Congress to overhaul housing finance laws, although a
real push on legislation is not expected anytime soon.
Taxpayers pumped $116.1 billion into Fannie Mae following
the U.S. housing market collapse, while Freddie Mac was propped
up with $71.3 billion. Both firms have already paid in dividends
more than they received in aid.
The government-run companies do not lend money directly, but
underpin the U.S. housing market by guaranteeing most new
mortgages in the country.
Fannie Mae and Freddie Mac purchase
loans from lenders and package them into securities that are
then sold to investors.
(Reporting by Jason Lange; Editing by Diane Craft)