Source: Bloomberg
Freddie Mac asked for aid and reported a $6.7 billion first-quarter loss in a Securities and Exchange Commission filing yesterday. The new request would add to the $50.7 billion in taxpayer aid the company has received since November 2008.
Freddie Mac and Fannie Mae have borrowed almost $137 billion from the Treasury since U.S. regulators seized the two government-sponsored enterprises in September 2008, after rising delinquencies and foreclosures pushed them to the brink of collapse.
“We had 137 billion reasons why this government-sanctioned duopoly needed to be terminated,” U.S. Representative Jeb Hensarling, a Texas Republican, said in a telephone interview yesterday. “Today we have 10 billion more reasons.”
House Republicans led by Hensarling are pushing to eliminate government subsidies for the two companies and repeal their affordable-housing mandates. Republican Senators Richard Shelby of Alabama, John McCain of Arizona and Judd Gregg of New Hampshire are aiming to include a similar provision in financial-rules legislation being debated in the Senate.
Treasury Secretary Timothy F. Geithner said the Obama Administration “made a choice” not to seek legislation to address Fannie Mae and Freddie Mac this year.
“We thought, frankly, we’d get a better outcome, a more thoughtful effort, more commitment to reform, if we were further ahead in the process of repairing the damage to the housing markets,” Geithner told the Senate Finance Committee on May 4.
The Congressional Budget Office in January estimated that direct U.S. aid to the GSEs may total $389 billion by 2019. In addition, the Treasury and the Federal Reserve last year spent $1.4 trillion to buy the companies’ mortgage-backed securities.
Representative Scott Garrett, a New Jersey Republican, criticized Democrats for not addressing the financial state of the companies, which own or guarantee about $5 trillion in mortgage assets, after the worst economic crisis since the Great Depression.
“I find it mind-blowing that Democrats reject the opportunity to engage in a serious conversation about reforming the entities that are clearly the government’s biggest toxic liabilities,” Garrett said in a written statement.
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