Fannie Mae repays its bailout cost

  • Los Angeles Times
  • Friday, February 21, 2014 3:57pm
  • Business

WASHINGTON — Fannie Mae posted its eighth straight profitable quarter in the final three months of last year and will send the federal government $7.2 billion, pushing its total dividend payments above the cost of the 2008 bailout for the first time, the company said Friday.

Boosted by the housing market rebound, the mortgage giant posted $6.5 billion in profit in the fourth quarter of 2013 and a record $84 billion for the year.

The dividend payment, based on those profits, will bring the total amount Fannie Mae has paid to the Treasury Department to $121.1 billion. That will more than fully offset the $116.1 billion in government aid it received since 2008.

“I’m very proud of what our employees have achieved, and I’m very happy for the taxpayers,” Fannie Mae Chief Executive Timothy Mayopoulos said.

Fannie Mae and its sibling firm, Freddie Mac, were caught in the middle of the subprime housing market collapse and on the brink of failure when the government seized them in 2008. The Treasury pumped a total of $187.5 billion into the two companies to keep them afloat so they could support the struggling housing market after the financial crisis.

Fannie Mae’s $7.2 billion payment, to be made in March, also for the first time brings the total dividends paid to the Treasury by the two companies above the $187.5 billion paid out.

With Fannie Mae’s next payment, the two companies will have sent $192.4 billion to the Treasury.

That figure does not include an anticipated dividend payment in the coming weeks by Freddie Mac, which is expected to announce its own fourth-quarter profit soon.

It would be the ninth straight profitable quarter for Freddie Mac, whose last dividend check nudged its total payments above the $71.3 billion bailout it received.

Under terms of the bailout, the dividend payments don’t reduce the amount the companies owe to the taxpayers. But the payments offset the government’s bottom-line costs.

Fannie Mae’s annual profit easily exceeded its previous record of $17.2 billion, set in 2012.

The company was helped last year by billions of dollars from settlements with banks over bad loans Fannie Mae guaranteed during the housing boom, as well as a recalculation of the tax write-down the firm could take on its assets.

Mayopoulos said Fannie Mae expected to remain profitable “for the foreseeable future” but that earnings were likely to be “substantially lower” this year as the housing market rebound slows.

The company’s results come as Congress and the White House work to overhaul the housing finance system. There is a consensus that Fannie and Freddie should be shut down, though no agreement yet on how to replace them as the House and Senate work on bills that take different approaches.

The billions in dividend payments coming to the Treasury each quarter help to reduce the budget deficit and complicate efforts to shut down the companies.

But Mayopoulos noted that the dividend payments mean Fannie Mae’s profits are not being used to recapitalize the company, and taxpayers are on the hook for any future losses.

“Obviously, it’s good news for taxpayers that Fannie Mae is profitable and sending dividends to the Treasury,” Mayopoulos said on a conference call. “But I don’t think our profits should be interpreted as a reason for delaying housing finance reform.”

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.