Freddie Mac’s need for money blamed on disappointing BofA settlement
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Steve Chiotakis: Today, the watchdog over at the Federal Housing Finance Agency is out with a report saying Freddie Mac went way too easy on Bank of America. The government-backed mortgage company — and its sister, Fannie Mae — accepted billions of dollars in settlements from banks. But the FHFA’s inspector general says Fannie and Freddie could have done much better for taxpayers.
From New York, here’s Marketplace’s Heidi Moore.
Heidi Moore: This summer, Freddie Mac asked the government for another $5 billion of support. Now they’re trying to explain why they need it. Freddie Mac’s main priority is to raise money. It’s being criticized for not being aggressive enough when it settled with Bank of America this year. Will taxpayers have to make up that shortfall? Take a guess.
Guy Lebas: By not obtaining the full value from Bank of America, Freddie Mac is effectively requiring taxpayer capital to be injected into the company.
That was Guy Lebas. He’s a fixed-income strategist with Janney Montgomery Scott. He says Freddie Mac wasn’t being sinister — they just want to get on with it, already.
Lebas: It’s important to return to your core business of lending to creditworthy borrowers and get these credit losses off the books as quickly as possible.
It’s too late to change Freddie Mac’s settlement with Bank of America. And experts don’t believe Freddie will be successful in its raft of lawsuits against 17 banks, either. Over to you, taxpayers.
In New York, I’m Heidi Moore for Marketplace.
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