The Fannie and Freddie Fee Machine

The federal government, in order to wind down mortgage giants, is collecting all profits generated by Fannie Mae and Freddie Mac—a move some say may backfire by providing the federal government a source of revenue that Congress will be hard-pressed to let go.

The Treasury announced in August that it would take all profits from the two housing giants in “a quarterly sweep of every dollar of profit that each firm earns.”

This “quarterly sweep” is an effort to recoup money that the federal government has loaned Fannie and Freddie, starting with the 2008 bailout. The federal government took over Fannie and Freddie in September of 2008, in the middle of the housing crisis that brought down the economy. Since then, the two firms have struggled to regain profitability, only recently making money on their investments.

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