Obama budget predicts $51B profit from Fannie, Freddie rescue

{mosads}Assuming the GSEs stick around to 2023, Obama’s budget estimates the treasury will have received a total of $238.5 billion in dividend payments from the pair, good for a tidy $51 billion profit from the rescue.

At the beginning of April, Fannie reported it turned a $17.2 billion profit in 2012, its largest in history and first since the bubble burst. The Treasury received $11.6 billion of that profit. Freddie reported an $11 billion profit in 2012, a record in its own right.

Under a new agreement struck in August, all profits made by the entities must be passed on to the Treasury, and the two are not permitted to grow their capital reserve funds. In fact, the two are required to gradually shrink those reserves each year until they disappear.

The dwindling reserves are part of an effort that could pose the biggest challenge to turning a profit on the GSE bailout — Washington’s efforts to overhaul the nation’s housing market and eliminate the GSEs’ role in it.

Both parties, including the White House, agree that Fannie and Freddie ultimately need to be wound down, but the sides have yet to coalesce around any particular strategy for doing that. Republicans are eager to see the private sector step up to the plate and fill the role previously filled by the GSEs, while Democrats want to ensure housing can remain affordable across income classes. The relevant committees are expected to spend much of the 113th Congress debating the issue, but hopes are slim for a comprehensive reform package to gain traction in the next few years.