WASHINGTON—The Federal Housing Finance Agency's (FHFA) annual stress test of Fannie Mae and Freddie Mac showed the government-sponsored enterprises would need a bailout of up to $77.6 billion under the worst-case economic scenario.
According to the test, the GSEs would need incremental Treasury Department draws of between $42.1 billion and $77.6 billion under the "severely adverse" scenario.
The GSEs had drawn a combined $191.4 billion from the Treasury as of the end of 2017.
The Dodd-Frank Act requires that stress tests be performed annually in order to determine if the GSEs have enough capital to absorb losses in the case of bad economic conditions. The hypothetical "severely adverse" scenario envisions a severe global recession accompanied by large reductions in asset prices, widening of corporate bond spreads, increased investor risk aversion and strained market liquidity conditions, NAFCU noted in its analysis.
The GSEs will pay dividends to the U.S. Treasury in September as their capital reserves ended the second quarter above $3 billion: Freddie Mac will pay $1.6 billion; Fannie Mae will pay $4.5 billion.
In December, Treasury and the FHFA announced a deal to allow the GSEs to reinstate $3 billion in their capital reserves.
Freddie Mac and Fannie Mae have been under the FHFA's conservatorship since 2008. NAFCU said it continues to push for housing reform that guarantees credit unions access to the secondary housing market and for fair pricing based on loan quality instead of volume.