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IMFnews
Wednesday, Nov 6, 2013
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GSE Earnings Preview: Freddie Mac Could ‘Pay Back’ Treasury in Total Soon

By Paul Muolo
[e-mail]
If Freddie Mac moves to capture a deferred tax asset allowance of $28.6 billion for the third quarter, it could wind up “paying back” the U.S. Treasury for all the assistance it received since its federal takeover in the fall of 2008.
According to former GSE executives, Freddie is expected to capture some or all of the DTA, when it unveils its 3Q 13 results later this week.
Since September 2008, when it was placed into conservatorship, the GSE has received $71.3 billion in draws from the U.S. Treasury while paying back $36.6 billion through dividends on its earnings, leaving an account deficit of $34.7 billion. However, if it captures the DTA for 3Q that would leave a “bill” of just $6.1 billion.
Over the past few months, Freddie has entered into large legal settlements with JPMorgan Chase and others tied to repurchases and faulty non-agency MBS. Those settlements and the earnings on its pristine book of business could push them over the repayment line.