It’s expected that later this month when their earnings are shared Fannie Mae & Freddie Mac will have paid back more than the $187 billion they received starting in 2008 as part of a government bailout. The last few years these mortgage giants have been making enormous profits and the government has been the primary beneficiary of that good fortune. Since receiving the bailout money the companies had been paying a 10% dividend on the preferred stock held by the Treasury. However, last year Fannie & Freddie began turning over all the profits to the government each quarter and that resulted in $130 billion alone last year.
While 2013 was a banner year for the companies, unless there is a substantial downturn in the economy these profits are expected to continue for quite some time each quarter. That bodes well for the government although there is litigation pending from other shareholders in the company which are challenging the repayment schedule. Regardless of the end result of these lawsuits the government has been helpful in keeping these companies viable and should reap some rewards themselves now.
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