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Volume 17 - Number 9

May 5, 2017

Moodys: Tax Reform Credit Negative for Fannie, Freddie

The Trump administration’s corporate tax rate proposal would not be a good look for Fannie Mae and Freddie Mac, according to a new analysis by Moody’s Investors Service. The ratings firm called a lower tax rate credit negative for the GSEs since it would affect their deferred tax assets and require a Treasury draw. Last week, top administration officials outlined Trump’s tax plan, which included cutting tax rates for businesses. Fannie Mae would have to write down its DTA by $15.6 billion and Freddie Mac by $5.7 billion if the corporate tax rate is reduced to 15 percent from the current statutory amount of 35 percent.

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