Bailout is Back: Fannie and Freddie Likely Need “Additional Treasury Investment” After Derivatives Losses

Thursday, March 19, 2015
By Paul Martin

Mac Slavo
March 19th, 2015
SHTFplan.com

There is trouble again for federal mortgage backers and bailout queens Fannie Mae and Freddie Mac, whose failures helped to trigger the housing market collapse and subsequent 2008 economic crisis.

The government enterprises are again turning their lowest profits since the recovery, thanks to derivatives losses – where most of the mortgage lender money is invested:

Fannie Mae will make its smallest payment to taxpayers in more than four years after large derivatives losses crimped its fourth-quarter profit, the government-controlled mortgage financier said on Friday.

Fannie Mae said a drop in long-term interest rates sharply reduced the value of the derivatives contracts it uses as hedges in financial markets, adding that low capital buffers are raising the risk it could need taxpayer money in the future.

The derivatives losses helped reduce quarterly profit to $1.3 billion, about 80 percent less than a year earlier, and the $1.9 billion check that Fannie Mae will cut for the Treasury in March will be the smallest since the second quarter of 2010.

The Rest…HERE

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