The Federal Housing Finance Agency and the Department of the Treasury have reached an agreement that will allow Fannie Mae FNMA,
and Freddie Mac FMCC, -0.51% to maintain their earnings for the foreseeable future, until they reach the capital targets needed to exit the protection. The agreement was consolidated through amendments to the purchase agreements for preferred shares held by the Treasury. Last year, the two agencies reached an agreement to allow the mortgage giants to retain up to $ 25 billion in earnings. Before that, all of Fannie and Freddie’s earnings had been transferred to the Treasury Department to reimburse the federal government for funds used to bail out the two businesses. FHFA director Mark Calabria warned that retained earnings would not be enough to recapitalize Fannie and Freddie and that without access to private capital they would still be at risk of bankruptcy in a future housing crisis.
- According to this source FHFA, Treasury agrees to let Fannie Mae and Freddie Mac withhold earnings
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