Freddie Mac has posted its second-largest quarterly profit ever, even as Congress and the White House discuss ways to kill off the mortgage giant
Freddie Mac has posted its second-largest quarterly profit ever, even as Congress and the White House discuss ways to kill off the mortgage giant.
Second-quarter net income for Freddie Mac was $5bn, up from $4.6bn in the first quarter of 2013.
The increase came primarily from higher derivative gains, tempered somewhat by higher losses on mortgage loans, according to a company press release.
Freddie Mac has been operating under the conservatorship of the Federal Housing Finance Agency since 2008, when risky loan choices left them edging toward insolvency.
Since then, Freddie has paid the Treasury cash dividends of $36.6bn, with another $4.4bn due in September. However, those dividends cannot be used to pay down Freddie’s outstanding obligation to the Treasury, which still held a $72.3bn liquidation preference on the company’s senior preferred stock as of June 30.
The profit rise comes as Washington discusses ways to untether itself from the organization. President Barack Obama this week called for the replacement of Fannie Mae and Freddie Mac with a new government mortgage reinsurer. A separate House bill written by Financial Services Committee Chairman Jeb Hensarling (R-Texas) would dismantle Fannie and Freddie without providing a replacement.
