Conservatorship of Fannie/Freddie

Maya MacGuineas — Fri, 10 Jul 2009 19:59:50 +0000

Date:

September 7, 2008

Who:

FHFA

Policy Area:

Sector Policy (Non-Financial)

Economic Target:

Government and GSEs

Action Type:

Government Conservatorship

Maximum Amount:

Amount Spent:

Deficit Impact:

389000000000

Placement of Fannie Mae and Freddie Mac into government conservatorship by the Federal Housing Finance Agency, until the institutions are deemed to have been stabilized. Conservatorship was coupled with other actions to ensure liquidity.

CBO estimates that $291 billion in federal outlays went towards the conservatorship of Fannie and Freddie in 2009, with a projected $98 billion in subsidies over the next 10 years.

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. They estimated that, in total, they would be required to purchase $50 billion from Freddie Mac and $16 billion from Fannie Mae.

Source:

Treasury/ FHFA Sept. 7 Announcement Treasury/ FHFA Sept. 7 Announcement

Treasury Feb. 18 Statement

CBO Report on Bugetary Treatment on Fannie and Freddie, January 2010

Notes:

Deficit impact represents CBO's estimate of the cost of bringing Fannie Mae and Freddie Mac "on-budget" for 2009-2019 (per CBO's proposed budgetary treatment) calculated by assessing the risk-adjusted net present value of Fannie Mae's and Freddie Mac's current net liabilities, plus their subsidy costs for 2009. (http://www.cbo.gov/ftpdocs/108xx/doc10878/01-13-FannieFreddie.pdf).

Is not a top-level node

Conservatorship of U.S. Central and Western Corporate Federal Credit Unions

suggp — Fri, 10 Jul 2009 18:31:14 +0000

Date:

March 20, 2009

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Government Conservatorship

Maximum Amount:

57000000000

Amount Spent:

5900000000

Deficit Impact:

5900000000

Takeover of two federal credit unions, US Central and Western Corporate, by regulators of the National Credit Union Administration. On March 20, 2009, both credit unions were placed into conservatorship "to stabilize the corporate credit union system and resolve balance sheet issues." Corporate credit unions do not directly serve customers, but rather play a supporting role for their membership of retail credit unions. US Central has 26 retail corporate credit union members and WesCorp has 1,100 retail credit union members. The NCUA justified the conservatorship because of a continual decline in value of the credit unions' holdings in asset and mortgage-backed securities.

Source:

NCUA Statement 3/20/2009

NCUA Guidance on Credit Union Losses

Notes:

Maximum amount is total value of US Central ($34 billion) and WesCorp's ($23 billion) assets. Amount spent and deficit impact are taken from the estimated liabilities of the National Credit Union System Insurance Fund for losses on mortgage-backed securities portfolios at US Central and Western Corporate, as detailed here. Although it is expected that insurance fund losses will eventually be recouped through higher user fees for member credit unions, deficit impact reflects initial insurance fund losses.

Is not a top-level node

Stimulus.org - Government Conservatorship

Conservatorship of Fannie/Freddie

Conservatorship of U.S. Central and Western Corporate Federal Credit Unions