Saturday, February 22, 2014

Fannie Mae finally "profits" Uncle Sam

Out of paradigm headline at Housing Wire here.

Fannie Mae is paying the U.S. Department of Treasury $7.2 billion, bringing its total dividend payments now to a level exceeding the total bailout it received. 
“Obviously, it’s good news for taxpayers that Fannie Mae is profitable,” Chief Executive Officer Timothy Mayopoulos said during the earnings conference call.Fannie Mae will have paid the Treasury $121.1 billion when this dividend payment is made.
Since 2008, Fannie received $116.1 billion in government bailouts. 
the federal government counts the money from quarterly profits as dividends instead of as a repayment of the bailout. 
As of Sept. 30, 2013, the GSEs returned $185 billion to the Treasury

So the way the government currently arranges the operations of these nationalized housing GSEs is another act that foments the smaller deficit we have seen over the last year.

These GSE operations coupled with the actions of the Fed to return interest it receives on both the US Treasury securities as well as the GSE bonds it is factoring has greatly contributed to what we can see ex post as a reduction in the federal deficit.

Its in many ways a "new world" post 2008 as far as evaluating fiscal policy.


Tom Hickey said...

These "profits" are taxes insofar as the withdraw $NFA from non-govt.

They are not called taxes because of the GOP commandment, "Thou shalt not raise taxes."

But they perform the same economic function as taxes, i.e., reduction of non-government $NFA.

The Rombach Report said...

Wake me when the US Treasury sends me a special dividend check in the mail for my share of the "profit".