Investors Balk As Billions In Fannie, Freddie Profit Goes Into The Government's Pocket
Fannie Mae and Freddie Mac have been raking in billions in profits as of late, and all of that money is being pocketed by the government — a fact that has investors seething.
The federal government bailed out the mortgage giants in 2008 for $187B, and they have remained under government control since, transfering all profits to the U.S. Treasury despite the fact that the companies are still traded over-the-counter.
Fannie and Freddie’s most recent payments sent $9.9B to the Treasury at the end of March, pushing the total they have payed to taxpayers up to $266B, Bloomberg reports. Several investors want their cut of the money and are taking steps to sue the government, claiming it is illegally confiscating their private property. So far all rulings have defended the government, but hedge fund managers Bill Ackman, founder and CEO of Pershing Square Capital Management, and John Paulson, head of Paulson & Co., have indicated they are going to keep pushing for a slice of the profits.
Those investors have a powerful ally. Treasury Secretary Steve Mnuchin called for privatizing Fannie and Freddie, a move that would ultimately transfer all profits back to investors.