In 2008, US Congress passed the Housing and Economic Recovery Act (HERA) that gave authority to a newly created government agency – the Federal Housing Finance Agency (FHFA) to take control of Fannie Mae and Freddie Mac. They did take control and under the control agreement, Fannie and Freddie were to pay a 10% dividend to the federal government every year. During the first few lean years, they had to borrow $ from the US Treasury (in exchange for preferred stock and other liabilities). But in 2012, the US Treasury did something even more sinister, they made the 10% into 100% and made it permanent. Recently, the total dividend payments back to the US Treasury so far has exceeded the total amount of money to bailout and loan these two GSEs.
So the real question is – Does the US Government have any real intention of giving up this money maker/federal cash cow soon? (i.e., wanna buy some swamp land in Arizona?)
Source: WSJ, 2-28-2014, A14