• The combined net worth of mortgage giants Fannie Mae and Freddie Mac soared to $125 billion due to strong earnings this week.
• These massive earnings put the companies on a path that could eventually lead to their release from government conservatorship.
• However, their release is heavily dependent on the political climate, which could potentially bury this possibility.
• The government took over Fannie Mae and Freddie Mac during the 2008 financial crisis, maintaining control ever since.
• The Biden administration shows a cautious approach, opening the door to private competition but not rushing to do so.
• Fannie Mae had a net income of $11.8 billion in 2021, up from $11.1 billion in 2020.
• Freddie Mac’s net income stood at $7.3 billion in 2021, a sharp increase from $2.5 billion in 2020.
• Despite substantial earnings and a considerable net worth, the road to freedom for these mortgage giants is fraught with obstacles—including political opposition and legal complexities.
”Freedom’s Just Another Word for $125 Billion…”
Fannie Mae & Freddie Mac: The Captured Titans
Uncertain Future Despite Earnings
Billionaire status for two mortgage behemoths, Fannie Mae and Freddie Mac, has landed them in the swanky club of the Monopoly-man-mustache-twirling elite. With a combined net worth of a whopping $125 billion (cue Dr. Evil’s laugh), it seems they’ve finally bounced back from their 2008 financial spanking.
But alas, these cash-wielding Goliaths aren’t free to roam the financial wilderness just yet. They’re on the fiscal equivalent of a kiddie leash, thanks to the government conservatorship put in place post the ’08 ruin. I mean, they threw the frisbee and broke the priceless Ming vase, it was bound to happen!
Their pink slips may get closer, though, as the political winds might shift in their favor. The Biden administration, while playing it safe currently, has hinted at a kinder future. But we know how unpredictable the political weather vane can be, right?
Fannie Mae had a total earning of $11.8 billion in 2021, and Freddie Mac isn’t too far behind, bagging a cool $7.3 billion. Those are some serious clams, see? But like in a Jane Austen novel, their freedom comes with a big ‘BUT’. Will the political elite feel generous or keep the golden goose under lock and key?
In the end, it could be a long wait. But hey, with $125 billion, there are worse fates than waiting, wouldn’t you agree?
Original article: https://www.inman.com/2024/02/16/strength-in-home-prices-helped-boost-fannie-freddie-2023-profits/
