According to their 2023 Dodd-Frank stress tests, Fannie and Freddie would remain profitable even in the worst financial depression of the modern era.

Rising home prices allowed Fannie and Freddie to drive up second-quarter profits by reducing their loan loss allowances. (Includes data chart.)

Timing differences in their provisions for loan losses allowed Fannie’s first-quarter profits to more than double while Freddie’s climbed just 13.2% compared with the fourth quarter. (Includes data chart.)

In order to have a return on capital sufficient to attract private investors, the GSEs would have to charge g-fees of about 76 basis points, according to former Freddie CEO Don Layton.

Almost all of the decline in combined GSE profits was due to a spike in loan-loss provisions. But while Fannie’s provisions continued to grow in the fourth quarter, Freddie’s may have peaked in the third quarter. (Includes data chart.)

Fannie Mae put money away for a rainy day; Freddie Mac postponed its fourth-quarter earnings report.

Systemwide, FHLBank advances grew 36.5% in the third quarter, helping drive a 51.1% sequential increase in profits. (Includes three data charts.)

Sagging home prices forced the GSEs to post a combined $4.34 billion provision for credit losses in the third quarter, undercutting retained earnings. (Includes data chart.)

The GSEs earned a combined $20.5 billion in theoretical net income under the severely adverse economic scenario of the 2022 stress tests. But those returns would vanish if they had to reserve for deferred tax assets.

The timing of credit-related benefits and losses affected the profits of Fannie and Freddie in the first half of 2022. (Includes data chart.)