Fannie Mae and Freddie Mac Receive $46 Billion From Treasury
By Daniel at 2 April, 2009, 12:52 am
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
April 1 — The U.S. Treasury injected $46 billion in emergency funds into government-controlled mortgage-finance companies Fannie Mae and Freddie Mac.
The Treasury payout yesterday included a $15.2 billion investment in Fannie’s preferred stock and a $30.8 billion purchase of Freddie’s preferred shares, the companies said in separate filings to the Securities and Exchange Commission today. The companies must pay a minimum dividend of 10 percent.
The Obama administration and Congress have been leaning on the government-sponsored enterprises to help lower mortgage rates and loosen lending requirements even as the two suffer record losses on their existing mortgage investments. Regulators put the two into conservatorship in September, and the Treasury has agreed to invest as much as $200 billion into each company as needed when their assets fall below the value of liabilities.
Freddie’s net worth was negative in both the third and fourth quarters. The McLean, Virginia-based company took $13.8 billion in aid from the Treasury in November. Washington- based Fannie’s draw from the fund yesterday was its first and goes toward erasing a net-worth deficit for the fourth quarter.
Both companies said in recent securities filings that they will need more aid and that the $400 billion Treasury lifeline may not be enough to stay afloat this year.
Freddie’s total of $44.6 billion in draws from the Treasury’s preferred stock program carries an annual dividend of at least $4.5 billion, according to a March regulatory filing. Fannie’s draws would require an annual dividend payout of at least $1.6 billion, according to a February regulatory filing.
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
No comments yet.