Fannie, Freddie profits surprise
WASHINGTON — Government-owned mortgage financiers Fannie Mae and Freddie Mac could send about $179.2 billion in profits to taxpayers during 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 were made in an addendum to President 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.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- U.S. Department of Agriculture mismanaged rural program, federal audit shows
- Quarantine lifted, Maine nurse given right to roam
- Medicare paid for drug coverage of patients who had died, investigators say
- Unaccompanied immigrants put heavy strain on schools, charities
- Ebola virus could overwhelm health care system, AP finds
- Nurse defies Maine quarantine in standoff over Ebola
- Open encrypted messages by updating technology access law, FBI Director Comey says
- Headaches linked to weight loss surgery
- Health-exchange subscribers have trouble finding doctors to accept their insurance
- As Marines depart Afghanistan, some ask whether gains will hold
- Nurse, Akron native who had Ebola discharged from hospital