Fannie Mae’s and Freddie Mac’s new chief executives, appointed in the government takeover of the mortgage-finance companies this month, said they are trying to calculate the businesses’ assets and it’s too early to determine whether they’ll need access to taxpayer funds.
“We’re both spending a lot of time trying to evaluate the assets,” Freddie CEO David Moffett said Thursday at a hearing of the House Financial Services Committee in Washington. “The next six months will determine whether we’re going to need access to this facility.”
The Federal Housing Finance Agency put Fannie and Freddie into conservatorship Sept. 7 and pledged as much as $200 billion in taxpayer support as the companies’ accounting and losses threatened to erode capital and further damage the housing markets. Lawmakers asked Moffett and Fannie CEO Herbert Allison whether it’s conceivable that the companies won’t need federal aid if a broader $700 billion market rescue plan under consideration in Congress works.
“It could bring confidence to the securities markets,” Allison said. “That could play a role in allowing more refinancings and more mortgages.
“It’s just hard” to know for sure, he added.
Their agreement requires federal aid to maintain positive net worth. Fannie’s shareholder equity, which measures how much money would be left to stockholders after Fannie pays its bills, was about $41 billion at the end of June, while Freddie’s stood at about $13 billion, according to data compiled by Bloomberg. The executives said they will release revised data when they report earnings next month.
