Purchase of Freddie Mac Preferred Stock
Who:
FHFA
Policy Area:
Sector Policy (Non-Financial)
Economic Target:
Government and GSEs
Action Type:
Equity Purchase
Maximum Amount:
> $100.00 billion
Amount Spent:
$63.70 billion As part of conservatorship, the Treasury agreed to purchase up to $100 billion in stock from each GSE ($200 billion total) including an immediate receipt of $1 billion in senior preferred stock from each GSE as well as warrants to purchase 79.9% of each GSE's common stock. On 2/13/2009, the Treasury Department increased the maximum amount of GSE stock they would agree to purchase by $100 billion each, bringing the total to $400 billion. At the time, they estimated that, in total, they would be required to purchase $50 billion from Freddie Mac and $16 billion from Fannie Mae.
In a release on December 24, 2009, the Treasury announced that it has terminated the $200 million cap on purchases on Fannie Mae and Freddie Mac preferred stocks, stating thatsuch steps "are necessary for preserving the continued strength and stability of the mortgage market."
Notes:
Since the purchase of Freddie Mac preferred stock by FHFA constituted an intergovernmental transfer of stock from a GSE to a federal agency, the deficit impact is zero. Amount spent as of 2/25/2011 (http://www.fhfa.gov/Default.aspx?Page=70).