Mortgage-finance giant Fannie Mae experienced a $6.5B net loss in Q4 as a result of the new lowered corporate tax rate.
This drop could prompt the Federal Housing Finance Agency to seek a taxpayer infusion of $3.7B from the Treasury Department — the first cash infusion the company has received in six years, the Wall Street Journal reports.
The WSJ attributes the need for the cash infusion to a one-time accounting charge linked to lower corporate tax rates, which fell from 35% to 21% under the new law.
Both Fannie Mae and Freddie Mac were placed under government conservatorship in the second half of 2008 after receiving a bailout of more than $185B to prevent a collapse. Terms of the conservatorship require the mortgage companies to send the majority of their profits to the government at the end of each quarter, with the exception of a set buffer — meaning the company functions with limited capital.
Following the infusion, Fannie will have provided the Treasury Department with $166.4B, while it has received $119.8B, according to the WSJ.
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