WASHINGTON–Fannie Mae reported a $6.5-billion loss for the fourth quarter of 2017, which likely means it will need an infusion of taxpayer funds to shore up capital even as it continues to generate money for the Treasury.
The quarterly loss was due to a one-time accounting charge due to the reduction in the corporate tax rate. Nevertheless, Fannie Mae, which has been operating under government conservatorship for nearly a decade, reported that its regulator, the Federal Housing Finance Agency, will be seeking $3.7 billion in funds from the Treasury Department as a result of the loss. The company is operating with limited capital under the terms of its federal bailout.
Complicating the situation is that “it is a politically fraught issue and the latest illustration of the awkward nature of the government’s indefinite stewardship of Fannie and its smaller counterpart, Freddie Mac,” noted the Wall Street Journal.
Rep. Jeb Hensarling (R-TX), chair of the House Financial Services Committee, responded by criticizing the likely request for funds, which he called another “bailout request,” adding, “taxpayers are sick and tired of getting ripped off by Fannie and Freddie.”
However, Fannie Mae has not required funds from the federal government since March 2012, and even after the planned infusion, Fannie will have sent a total of $166.4 billion to the Treasury, compared with the $119.8 billion in infusions it has received.
“Americans deserve better,” Hensarling said in a written statement to the Wall Street Journal. “That’s why Congress can and should enact comprehensive housing finance reform this year to create a sustainable housing system.”
But with no deal imminent, it is increasingly unlikely Congress will agree to overhaul the companies this year, according to industry lobbyists and congressional aides, the Journal said in its analysis.
The loss in the quarter was driven by a $9.9-billion charge related to remeasurements of the company’s deferred tax assets following U.S. tax law changes. In the quarter it paid a $648 million dividend to the Treasury.