By Rachel Stoltzfoos 11:23
AM 03/18/2015
Fannie Mae and Freddie Mac may need another massive taxpayer
bailout, according to a new Inspector General report which casts doubt on their
future profit margins.
The federal housing finance agencies
were bailed out by taxpayers after the 2008 financial crisis, in the form of a
$188 billion Treasury buyout of shares. Although the agencies are technically
unable to buy back those shares, they have paid the Treasury more than $163
billion in dividends since 2013.
In December the Federal Housing
Finance Administration ordered Fannie and Freddie to again divert some of their
profits to low-income housing funds — as they had done before the 2008 crisis.
But the FHFA report,
titled “The Continued Profitability of Fannie Mae and Freddie Mac is Not
Assured,” says that one-time events in 2013 and 2014 boosted their profits, and
that ongoing mortgage market uncertainty could reduce their future profits. So,”stakeholders
should not presume continued profitability of the Enterprises,” the report
warns.
A huge portion of the stakeholders
are taxpayers, and in a worst case scenario, such as a repeat financial crisis,
they could be on the hook for another bailout of up to $190 billion, the report
states. “The mortgage industry is complex, cyclical, and sensitive to changes
in economic conditions, mortgage rates, house prices, and other factors.”
Taxpayer-Backed Fannie And Freddie
Ordered To Subsidize Low-Income Housing. Fannie Mae and Freddie Mac have yet to
repay a $188 billion taxpayer bailout, but the Federal Housing and Finance
Administration ordered the agencies Thursday to begin diverting some of their
profits to low-income housing funds. Texas Republican Rep. Jeb Hensarling, who
chairs the Financial Services Committee, slammed the move saying in a statement
Thursday, ”Director Watt’s decision to activate the Fannie and Freddie slush
fund may be an early Christmas present for Acorn-like, liberal housing
activists, but it’s a lump of coal in the stocking of every American
taxpayer."
A 2008 law ordered Fannie and
Freddie to pay a percentage of profits into the Capital Magnet and Housing
Trust Funds, but the FHFA suspended payments that same year, because Fannie and
Freddie were in such bad financial shape. But in letters to Fannie and Freddie
Thursday, FHFA Director Mel Watt revoked the six-year suspension and ordered
them to resume paying into the funds.
Source:http://dailycaller.com/2015/03/18/fannie-mae-and-freddie-mac-may-need-another-bailout/
Comments
It’s time to raise hell about this.
Norb Leahy, Dunwoody GA Tea Party Leader
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