Fannie Mae, Freddie Mac Seen By FHFA As Having Up To $157B Shortfall In Crisis
ByThe Federal Housing Finance Agency said on Thursdaygovernment sponsored mortgage agencies Fannie Maeand Freddie Mac would collectively have an up to $157.3 billion shortfall in the event of a next financial crisis. The stress test, a mandate from the 2010 Dodd Frank Act, indicates that in a sharp financial downturn the government would likely have to step up once more with taxpayer funds to stabilize Fannie and Freddie.
In its report, the FHFA said Fannie and Freddie stood to be in a position of between a $68.6 billion shortfall and a $157.3 billion shortfall, depending on how one treats deferred tax assets that would be created by losses created from the downturn. What the FHFA called a ‘severely adverse scenario’ involves a protracted recession where unemployment surges to 10% nationwide by 2016, real gross domestic product declines 4.5% and yields on the 10-year Treasury note fall to 1%…
Fannie Mae, Freddie Mac Seen By FHFA As Having Up To $157B Shortfall In Crisis
