Depending on who you talk to, keeping Fannie Mae and Freddie Mac under government control will be either a big money-maker or a big money-loser for the government.
The White House's Office of Management and Budget estimates that Fannie and Freddie will send about $181.5 billion to the Treasury over the next decade. The Congressional Budget Office, meanwhile, predicts that the firms will cost the government to the tune of about $19 billion during the same time period.
The difference results from the fact that the two agencies are doing radically different math when it comes to the mortgage giants, according to a Washington Post report. Neither can they agree on exactly what Fannie and Freddie are.
The OMB treats Fannie and Freddie as third-party agencies operating outside the government, the Post reported. That means the money they send to the Treasury counts as receipts to the government's coffers. The CBO, meanwhile, counts Fannie and Freddie as part of the government for as long as they remain under conservatorship. Under that assumption, the money the firms send to the Treasury is merely an intra-governmental funds transfer, according to the Post.
Fannie and Freddie collect fees to insure mortgages. The CBO studied whether those fees would amount to more over the next decade than the amount the firms would spend covering loans that sour. The agency concluded that they would not, the Post reported.
"The cash flows that appear to be profits in the popular narrative are really a result of legacy guarantees made years or decades in the past," Deborah Lucas, a former assistant deputy at the CBO, said during a speech at the Bipartisan Policy Center.
But Michael Bopp, a former OMB official who spoke at the same event, said the CBO's own math relied heavily on inconsistent judgments, the Post reported.
Congress is currently considering legislation, proposed by Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) that would replace Fannie and Freddie with a new federal mortgage system and shift more of the risk to the private sector.
“The CBO clearly thinks Fannie and Freddie lose money,” Bopp said. "The question becomes: Will the new entity created under Johnson-Crapo cost more than Fannie and Freddie or not?”