(Bloomberg) — Fannie Mae and Freddie Mac could return $191.2 billion in profits to taxpayers over the next 10 years if they continue operating under federal conservatorship, according to White House budget analysts.
The mortgage-finance companies, which have operated under U.S. conservatorship since they were seized during the 2008 credit crisis, are making money again after a $187.5 billion bailout. Through December, they had returned $225.5 billion to the Treasury, which takes all of their profits.
The projections, released Monday as part of an annual analysis prepared by the Office of Management and Budget, show an increase from last year, when budget writers forecast a $171.2 billion profit through 2024.
President Barack Obama has called for legislation to wind down and replace Fannie Mae and Freddie Mac as part of a broad housing-finance overhaul. Investors in the two companies, including mutual-fund firm Fairholme Capital Management LLC, have sued the U.S. over the sweep of the companies’ profits.
“To finish addressing the weaknesses exposed by the financial crisis, the housing finance system must be reformed” and Fannie Mae and Freddie Mac “should be wound down,” the budget analysts said.
Separately, payments from Fannie Mae and Freddie Mac could reduce the federal budget deficit by an additional $39.5 billion through fiscal year 2025 if the companies continue to exist, according to the analysis. Those payments would come from a surcharge on the companies’ fees for mortgage guarantees that Congress added in 2011.
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