Fannie Mae, Freddie Mac Report Quarterly Earnings as Capital Buffer Draws Down

On May 5th, MarketWatch writes that Fannie Mae and Freddie Mac reported first quarter earnings of $2.8 billion and $2.2 billion, respectively. This compares to a profit of $1.1 billion for Fannie Mae in the first quarter of 2016, and a net loss of $354 million for Freddie Mac in the same period. Under the terms of the 2012 amendment to the bailout and conservatorship agreement, both GSEs must send all quarterly profits to the Treasury. The amendment also requires them to reduce their capital to zero by 2018. Last February, FHFA Director Mel Watt stated that the dwindling capital reserves represented an area of concern, saying. "I am signaling my belief that some of the challenges and risks we are managing are escalating and will continue to do so the longer the Enterprises remain in conservatorship."

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