Rep. Jeb Hensarling (R-Texas) is seeking answers from Federal Housing Finance Agency (FHFA) Director Mel Watt regarding his decision to continue Fannie Mae and Freddie Mac’s payments to the Housing Trust Fund and Capital Magnet Fund despite the GSEs latest infusion of taxpayer funds.
Hensarling is chairman of the House Financial Services Committee. The funds, established under the Housing and Economic Recovery Act of 2008, receive a portion of the GSEs’ revenues and allocate this to affordable-housing programs.
Hensarling said the FHFA’s policy regarding the payments was “deeply troubling,” adding that the GSEs reported a negative net worth at the end of 2017 and required a draw of taxpayer funds from Treasury. The representative also said Watt’s move contradicted his earlier guidance as well as his Congressional testimony before the Financial Services Committee.
“Accordingly, I demand you provide a detailed written explanation by Friday, Feb. 23, 2018, of how your decision to require continued GSE payments to the funds despite the need for a new draw on Treasury funds does not directly contradict your previous written and verbal guidance from 2014 and 2015, and how the FHFA intends to limit your ability to exercise your discretion in the future so that it can establish a consistent policy on this subject that provides both clear and reliable guidance to Congress and the GSEs,” Hensarling wrote.
Freddie Mac reported a $2.92 billion net loss for the fourth quarter, primarily as a result of a $5.4 billion write-down of the net deferred tax asset due to the impact of the recent tax-reform legislation. Fannie Mae reported a fourth-quarter net loss of $6.53 billion, primarily driven by a $9.96 billion provision for federal income tax in the fourth quarter following a re-measurement of its deferred tax assets.
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