Obama Budget Projects $191 Billion Profit From Fannie, Freddie

(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.

To contact the reporter on this story: Clea Benson in Washington atcbenson20@bloomberg.net

To contact the editors responsible for this story: Jesse Westbrook atjwestbrook1@bloomberg.net Gregory Mott



2 thoughts on “Obama Budget Projects $191 Billion Profit From Fannie, Freddie

    • It surely helps when the media accurately reports on the matter. It’s ridiculous that companies this profitable are being forced to stay in c-ship. The prevention of building capital is the antitheses of the reason for keeping c-ship. At this point, it is illogical. It also appears personal and political… and criminal…


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