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

23
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

Primatologists Lieven Devreese and Gaël Elie Gnondo Gobolo are the first to photograph Bouvier’s red colobus monkey, previously thought to be extinct, in a forest of Congo this March. The first description of the elusive primate was made in 1887. The only...
It has been a lowly day for U.S. treasuries, as the stock market gained momentum in the morning session. The three major stock indexes opened on a higher note after positive quarterly results from Morgan Stanley. During the day’s...
Three commonly used insecticides pose a severe risk to honey bee populations and the food chain in general. According to recent field studies, neonicotinoids impact reproduction and colony growth in some bee species. Furthermore, bees instead of avoiding these...
It has been an extraordinary day for the Nasdaq Composite index after strong earnings reports from leading tech companies. During its upward rally, the index broke a 15-year long closing record with companies like Google, Microsoft, and Amazon releasing...
A team of biologists from the GEOMAR Helmholtz Centre for Ocean Research Kiel in Germany, with the help of English and American colleagues, have come across a bizarre reproductive pattern in vampire squids. New evidence has shown that vampire squids living...