The consumer credit cycle seems to be weakening, given current credit trends in consumer ABS, analysts at Wells Fargo Securities said in a new report. They see the solution as being broad economic growth.
Fannie Mae and Freddie Mac this week reported a combined loss of $9.4 billion for the fourth quarter of 2017, a direct result of the Tax Cuts and Jobs Act and its impact on their deferred tax assets. The two government-sponsored enterprises had to reduce the value of the DTA by $10.2 billion.
All totaled, the new tax law will result in Treasury – which owns the senior preferred stock of the GSEs – forking over $4.01 billion to aid Fannie and Freddie...
Prior to release of 4Q17 results, the GSEs had an “account balance” of $103.0 billion with Uncle Sam: $291.4 billion of dividends paid to Treasury versus $188.4 billion of assistance received.
The DTA hit Fannie took and the resulting net loss was fully expected and likely won’t cause an uproar on Capitol Hill. However, one lobbyist quipped: "Ah, the first taxpayer bailout of a large financial institution since the Great Recession."
As National Association of Realtors Vice President Joe Ventrone put it: “It’s an unintended consequence of the tax bill rather than falling into the bailout narrative.”
Under this arrangement, the FHLBanks would be “jointly and severally liable” for the obligations of any single-family guarantor formed under the new system…
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