Fannie, Freddie could send $179.2 billion to taxpayers: White House
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[March 11, 2014]
By Margaret Chadbourn
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
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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
(Reporting by Margaret Chadbourn;
editing by Leslie Adler)
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