Mortgage-finance giants Fannie Mae and Freddie Mac could need nearly $100 billion in bailout money in the event of a new economic crisis, according to stress test results released Monday by their regulator.
The companies would need to draw between $34.8 billion and $99.6 billion in U.S. Treasury aid under a “severely adverse” scenario, depending on how they treated assets used to offset taxes, the Federal Housing Finance Agency said in its report. The losses would leave $158.4 billion to $223.2 billion available to the companies under their bailout agreements.
Fannie and Freddie, like other major financial companies, are required by the Dodd-Frank Act to face annual tests of their ability to withstand a major recession. The results are likely to be used both by proponents of letting the two companies build a larger capital buffer and by some policy makers who think such an effort isn’t needed.