Treasury says Fannie, Freddie bailout wasn’t a loan

by MPA22 Apr 2015
In early April, the head of the U.S. Senate Judiciary Committee, Sen. Charles Grassley (R-Iowa), asked federal officials to uncloak documents surrounding a 2012 decision to alter the terms of the taxpayer bailout of housing agencies Fannie Mae and Freddie Mac.

He noted in a letter to the U.S. Treasury that for the last two years, shareholders of Fannie Mae and Freddie Mac have been asking the United States government about its decision to require the government-sponsored entities (GSEs) to divert their profits to the U.S. Treasury.  And for the last two years, they haven’t received an answer.

Grassley also wrote, “the initial loan provided to Fannie and Freddie by Treasury is paid off. Will Treasury’s arrangement with FHFA terminate? If so, when? If not, why not?”

The U.S. Department of Treasury has replied, and according to the Wall Street Journal, the bailout wasn’t a loan, but an investment on which taxpayers are now being compensated.

Under the terms of the bailout by the U.S. Treasury, Fannie and Freddie are required to send their profits to the government and cannot build their capital buffer which causes many to believe that this is putting the profitability of the GSEs in jeopardy because legally they are not allowed to accumulate a financial cushion that absorbs future losses.

To date, the companies have paid the government more than $228 billion, $40 billion more than they took in the bailout.
 

COMMENTS

  • by SBHarkness | 4/22/2015 10:38:44 AM

    So now they are going to bleed FNMA & FHLMC for every dollar they can squeeze....to benefit the taxpayer...HOG WASH. The US Government has become so dysfunctional. I wish there was a way to demand a "NO CONFIDENCE VOTE." replacing ALL of them. Supreme Court Justices...some of whom are so old they cant even stay awake during proceedings, the House and Senate, and the executive office. Get ride of ALL of them and their political cronyism. Have an immediate election with out the months of campaigning...Hillary and her Scooby Van.........P-L-E-A-S-E...somebody wake me up this cant be real.

  • by | 4/22/2015 10:59:15 AM

    It's shariah law and a islamist tax. This America has lost economical since and accountability. The goverment can destroy by made up shit that makes no since and have no trail by jury.

  • by BD | 4/22/2015 12:37:15 PM

    I guess reform is just lip service. With money like that, why would government want to give it up.

Poll

Is TILA-RESPA a good or bad thing long term?