WASHINGTON–A bankers group is calling on Congress to end what it called the “destructive sweep” of earnings from Fannie Mae and Freddie Mac into coffers at the U.S. Treasury.
Noting representatives of the Federal Housing Finance Agency have been meeting with the White House, Camden R. Fine, president of the Independent Community Bankers of America, demanded something be done about how profits from the two government-sponsored enterprises are being handled.
The federal government placed both Fannie and Freddie into conservatorship during the financial crisis, and despite returning to strong profitability, Treasury continues to essentially own both companies.
“Fannie Mae and Freddie Mac last month reported more than $7.7 billion in third-quarter net earnings, all of which would be swept into the U.S. Treasury before the end of the year unless the Federal Housing Finance Agency directs otherwise,” said Fine. “With this latest profit sweep, the government-sponsored enterprises will have transferred more than $280 billion to the Treasury since 2013—nearly $100 billion more than the capital infusion they received during the Wall Street financial crisis.
“While this arrangement has been a great investment for the Treasury and has compensated taxpayers handsomely, both companies will enter 2018 with zero capital to protect taxpayers and support the mortgage market unless Washington acts,” Fine continued.”
Fine said the ICBA continues to call on FHFA Director Mel Watt and Treasury Secretary Steve Mnuchin to end what he called a “destructive sweep of GSE earnings and to allow both companies to begin to rebuild their capital buffers to avoid another taxpayer bailout.”