WASHINGTON–Fannie Mae, which has been reported enormous profits since emerging from the housing crisis, is now at risk of needing a government bailout that could shake confidence in the housing finance market, according to the Financial Times.
The Financial Times reported that Fannie Mae's CEO and its regulator are “sounding the alarm on a decline in the institution's capital cushion, which is on course to vanish in 2018, when it would have to ask the U.S. Treasury for emergency funds.”
The Financial Times said the warnings highlight Washington's inaction on housing policy and its failure to reform the institution, which guarantees nearly $3 trillion of securities and enables 30-year fixed rate loans, following the last financial crisis.
Since 2008 Fannie Mae has continued to operate in a state of government-sponsored conservatorship in which it is neither fully nationalized nor private. Because the government does not let Fannie Mae retain profits, Tim Mayopoulos, its chief executive, told the Financial Times that its capital buffer, which has dwindled from $30 billion before the crisis to $1.2 billion today, was on track to disappear by January 2018.