Gretchen Morgenson for The New York Times, here:
For decades, the companies had maintained that their mortgage operations posed no risk to taxpayers; their pals in Congress echoed this refrain. But then came the mortgage debacle, and taxpayers had to shore up the companies with $187.5 billion. Initially, Fannie and Freddie had to pay interest on the loan. But in August 2012, the Treasury and F.H.F.A. abruptly changed the agreement; under the so-called third amendment, the government began sweeping all the companies’ profits into the Treasury. Since then, Fannie and Freddie have been immensely profitable. As of last December, the Treasury had received a total of $225.4 billion from the companies. ...
The initial $187.5 billion loan remains outstanding, however, because of the deal’s structure. ...
But recall what was going on in mid-2012. The presidential election was in full swing, and Democrats and Republicans were clashing over the debt ceiling. That May, in a shock to many, Fannie and Freddie reported profits from their operations for the first time since the mortgage crisis. The amount: $4.5 billion. And plenty more was to come. Certainly, giving the Treasury access to billions of dollars in the companies’ profits during this time provided financial flexibility to the executive branch that Congress might not otherwise have approved.
