Fannie, Freddie could need $190bn in taxpayer cash if economy tanks again

by Ryan Smith01 May 2014
Fannie Mae and Freddie Mac may need up to $190 billion in taxpayer cash if the economy takes a severe tumble, according to the Federal Housing Finance Administration.

The FHFA said Wednesday that the number was a worst-case scenario based on its stress tests of Fannie and Freddie, according to a Reuters report.

In the event of another severe economic meltdown, Fannie and Freddie could require anywhere from $84.4 billion to $190 billion in taxpayer aid, Reuters reported. The mortgage finance giants have already drawn $187.5 billion in aid from the Treasury in the wake of the financial crisis. Since becoming profitable, they’ve returned $202.9 billion in dividends to the government.

Freddie Mac spokesman Tom Fitzgerald stressed that the tests were examining a worst-case scenario.

“It is important to remember that the stress test results are modeled projections based on hypothetical economic conditions prescribed by FHFA,” Fitzgerald told Reuters. “Actual outcomes may be very different.”

“These results of the severely adverse scenario are not surprising given the company's limited capital,” Fannie Mae Senior Vice President Kelli Parsons said in a statement.


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