Fannie, Freddie Could Need Another Bailout as Risks Rise
(Reuters) – U.S. housing finance companies Fannie Mae and Freddie Mac could require more bailouts from U.S. taxpayers as risks are rising due to shrinking reserves, an internal watchdog for the firms’ regulator said on Wednesday.
Washington bailed out the two firms in 2008 at the height of the financial crisis and has since seized all their quarterly profits while demanding the firms reduce their capital buffers.
“Future profitability is far from assured,” Federal Housing Finance Agency Office of Inspector General said in a report, pointing out that the firms could again chalk up losses on their derivatives portfolios, similar to those they reported in the fourth quarter.
“(This) increases the likelihood of additional Treasury investment,” the report stated.