Perplexes Anti-Government GOPers

Jim Puzzanghera, LA Times

Federal officials swooped in to rescue mortgage finance giants Fannie Mae and Freddie Mac in 2008 with the largest of all the financial crisis bailouts — a combined $187.5 billion — because they were considered too big to fail.

Now, despite bipartisan support to shut them down, Fannie and Freddie may prove to be too profitable to close.

Fannie and Freddie play a vital role in the mortgage market by purchasing or guaranteeing more than 6 in 10 new loans. And the housing market’s recovery has reversed the finances of the once-private companies, now wards of the U.S. government.

Fannie and Freddie are not only making money but also sending huge dividend checks to the Treasury — a combined $39 billion this week for their latest quarterly payment — and some are wondering why they should be put out of business.

“We’re a country that’s running huge deficits, and here are two government entities that are going to produce somewhere in the neighborhood of $40 billion to $50 billion a year for the government,” said Guy Cecala, publisher of Inside Mortgage Finance Publications, which produces industry newsletters. “Can we really afford to kill off cash cows?”

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