Arab Today, arab today freddie mac reimburses us bailout on huge profit jump
Last Updated : GMT 21:53:08
Arab Today, arab today
Arab Today, arab today

Freddie Mac reimburses US bailout on huge profit jump

Arab Today, arab today

Arab Today, arab today Freddie Mac reimburses US bailout on huge profit jump

New York - AFP

Freddie Mac Thursday said its payments to the US Treasury have exceeded its 2008 US bailout funds as the US mortgage-finance giant notched a huge jump in earnings. But Freddie signaled that its meteoric earnings growth, a more than four-fold increase annually, is "not sustainable" long term, in part because of slowing home price gains. The rise in home prices has meant a big drop in Freddie Mac's provisions for bad loans. Earnings have also been lifted by favorable accounting effects and by a series of settlements with banks and other financial institutions related to the subprime mortgage crisis. Net earnings for the quarter ended December 31 were $8.6 billion, up from $4.5 billion in the year-ago period. The results included $5.6 billion in legal settlements. For the year, Freddie garnered $48.7 billion in profits, up from $11.0 billion in 2012. Freddie said with its latest dividend payments to the US, it had paid $71.35 billion to the Treasury through the end of 2013, slightly above the $71.34 billion it received from Treasury since the 2008 bailout. The company said it would send $10.4 billion to the Treasury in March, bringing the total paid to $81.8 billion. Freddie's earnings came after a similar report from sibling organization Fannie Mae, which said last week that it will have reimbursed its bailout with a March dividend payment. Both Fannie and Freddie, which back most of the mortgages financed in the United States, have been operating under the conservatorship of the Federal Housing Finance Agency since September 2008. The government stepped in to rescue them from bankruptcy during the financial crisis. The bailout was aimed at providing liquidity and stability to the housing market and prevent a wider financial crisis. Founded by Congress, the two companies will remain under conservatorship until Congress acts to wind them down or remove government support.

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