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Is Freddie Mac Facing another Draw?

Thursday, March 19, 2015

In 2013 Fannie Mae and Freddie Mac (the GSEs) both essentially bankrupt five years earlier, posted huge profits.  For Fannie Mae it was $84 billion and Freddie Mac $49 billion.  Both of course disclosed that much of the profit was the result of reclaiming tax assets written down during the crisis that led to their being put in government receivership in 2008.  Those one-time adjustments reaped $45 billion for Fannie Mae and $23 billion for Freddie Mac.  

Still it was a spectacular year for the GSEs, and in an brief written for the Urban Institute, Jim Parrott, a senior fellow at the Institute and owner of Falling Creek Advisors says talk around Washington "began to shift from winding them down to releasing them from conservatorship, taking much of the wind out of the sails of the already flagging push for overhauling the housing finance system.  All reform involves risk, after all," Parrott said, "and these numbers suggested that we were risking an increasingly healthy system."

 

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