Mortgage giant Fannie Mae saw record profits in the first quarter as home prices rose, allowing it to make a large repayment to the US government for the 2008 bailout.
Fannie Mae, which along with the smaller firm Freddie Mac
guarantees most US mortgages, will send 59.4 billion dollars back to
the government, bringing it closer to repaying its bailout.
The funds come during a crunch for the US budget, with the extra
money likely to give lawmakers breathing room on the debt ceiling,
which is set to hit its limit later this month. The added funds would
give the Treasury more flexibility with accounting measures now set
to extend a fight over the debt limit until October, according to an
analysis by the Bipartisan Policy Center think tank.
The move comes amid 58.7 billion dollars in profit in the quarter,
largely from deferred tax benefits. Without the benefits, profits
stood at 8.1 billion dollars.
The payment will bring to 95 billion dollars the amount the
company has repaid of its 117-billion-dollar loan.
Fannie and Freddie were seized by regulators in September 2008 as
the US financial system stood on the brink of collapse. The crisis
was caused by increasingly risky financial investment schemes based
on bundling of low-quality - so-called subprime - mortgages.
The risky practice prevailed throughout the financial investment
system, brought down major US financial firm Lehman Brothers and
triggered an 800-billion-dollar taxpayer rescue effort for banks and
mortgage companies. It also set off a world-wide recession.
