Fannie Mae-No Politics (FNMA)

[Cubshawk]

YanksGhost

---Yes, you are correct that remaining backstop in further draws is available under the SPSPA. However, it costs the government around $250 B per year to continue this credit facility. THAT is a lot of budgetary pressure on revenue and both the debt ceiling and the ballooning government deficit. From the government's perspective, the risks of maintaining the backstop while the GSEs rebuild capital may be far greater than just putting them in the Waste Management corporate dumpster along with General Motors.

I HATE the thought that this could happen. I think it could be a travesty. But I encourage you to consider its possibility before simply dismissing it.

This is not accurate. The talking papers below indicate the credit line to be off-budget accounting. And even if it is on the budget the line item can be released by the OMB prior to the end of the year and allocated other places. Every agency at every level every year does this - the project spending at the beginning of the year and as the year progresses and their budget become clearer they request more funds or the release/send back funds. And thus, well before the end of the year FHFA would be able to release that line item as they know it won't be drawn on that year and it will be spent elsewhere. It's not costing the government anything budget-wise.


https://www.budget.senate.gov/imo/media/doc/Fannie%20&%20Freddie%20BB071516[1].pdf
http://www.crfb.org/blogs/fannie-and-freddie-and-budget
http://www.crfb.org/blogs/accounting-fannie-and-freddie
https://www.heritage.org/housing/report/revealing-fannie-maes-and-freddie-macs-budget-costs-step-toward-gse-elimination