Fannie Requires $3.7 Billion Treasury Draw Resulting from Tax Law Change

Bloomberg writes that after posting fourth-quarter and full-year financial results on Wednesday, February 14th, Fannie Mae will require a $3.7 billion dollar draw from the United States Department of the Treasury in the first quarter of 2018 to keep its net worth from going negative. The article notes that this change was an unintended but anticipated event, driven by changes in the corporate tax code that devalued the assets that Fannie can use to offset taxes, resulting in a $6.5 billion dollar loss in 4Q2017. In a statement, Fannie Mae CEO Tim Mayapoulos said that the company's business was strong, stating, "Anybody who's been paying attention to the situation has been entirely aware that this draw was likely". Additionally, Federal Housing Finance Agency Director Mel Watt wrote in letters addressed to the GSEs that, notwithstanding the impending Treasury draws, they should continue to make payments to funds that finance affordable housing. Director Watt wrote that the devaluation of tax assets do not "relate to any financial instability" in the companies "either now or in the future."

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