US Posts Record December Budget Surplus Thanks to Fannie Mae, Freddie Mac...

US Posts Record December Budget Surplus Thanks to Fannie Mae, Freddie Mac Payments

262
0
SHARE

US Posts Record December Budget SurplusThe federal government posted a record budget surplus in December thanks to payments by government-controlled housing finance giants Freddie Mac and Fannie Mae.

The mortgage finance companies, which were held afloat by $187 billion in taxpayer money after going under government control in 2008, made large dividend payments in December in exchange for the support from the government.

Sponsored Links

Those payments helped the federal government take in a $53 billion surplus; the U.S. Treasury said this week. A Bloomberg survey of 29 economists gave a median estimate of a $44 billion surplus, which was the same as the Congressional Budget Office’s estimate.

The surplus compares to a $1.19 billion deficit in December 2012. Payments from Fannie and Freddie were nearly $34 billion more last month than a year earlier, the report noted.

A strengthening economy and improving tax revenue slashed the government’s deficit as a share of gross domestic product by more than 50% to $680 billion in the fiscal year ending on September 30 from a record $1.42 trillion in 2009. Meanwhile, the 1.2% drop in the jobless rate to 6.7% last year was the steepest calendar year drop since 1983. Federal revenue climbed 8% to $664.6 billion in the first three months of the last fiscal year, with individual payroll and income taxes accounting for the majority of the increase due to higher tax rates that began in 2013.

Fannie and Freddie have taken $187.5 billion in aid since 2008. They have returned $185.2 billion — counted as a return on the 80% stakes the government holds — not as repayment.

The Federal Housing Finance Agency is the conservator and regulator of Fannie Mae and Freddie Mac, as well as the regulator for 12 Federal Home Loan Banks. Last month, the agency released its 2013 Performance and Accountability Report, which disclosed the enterprises achieved positive earnings growth during October 2012 through September 2013.

Just five years ago, both Fannie and Freddie were on the verge of bankruptcy. This is a different story today, as both are financially healthy and contribute a significant amount of income, producing between $40 billion and $50 billion a year for the government.

Government spending dropped 8% to $838.2 billion last month. The payments from the mortgage giants help reduce spending but are not included in total revenues.

More News

The frenzied demand for lower mortgage rates has definitely slowed after reaching a peak in 2012. Mortgage rates have remained consistently below 4% for some time, and it would be easy to assume that almost everyone who could have...
Samsung has officially confirmed that the Galaxy S7 flagship will be announced at the Unpacked 2016 event on February 21. While specs wise, the company is yet to confirm anything, one can expect at least two different versions of...
Home prices rose in 20 cities at a faster pace at the end of 2015, continuing a hot growth streak that some economists warn may hurt affordability. The Standard & Poor's/Case-Shiller 20-city home price index increased 5.8% in November from...
Yesterday, Samsung officially revealed the launch date of the much anticipated Samsung Galaxy S7 lineup. The company officially announced via a teaser video that the Galaxy Unpacked event of 2016 will be held on February 21. This means that...
While mortgage rates remain fairly flat as the week begins, they have been declining for more than one month despite the Federal Reserve raising interest rates in December. Continued market volatility and rising home prices are keeping mortgage rates...