New Crisis Calls For New Loans For Fannie and Freddie

August 8, 2017 Share Print 0

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.

Bloomberg

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Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA

Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.