Thursday, February 27, 2014

Were Fannie, Freddie Negotiations Done in Good Faith?

Were Fannie, Freddie Negotiations Done in Good Faith?



Ugoletti expects us to believe that a team of professionals, charged with managing two huge entities with combined balance sheets of $5.3 trillion in June 2012, hadn't considered that the GSEs, having returned to profitability in the midst of the U.S. housing recovery, would be able to recover their deferred tax assets. It seems incredible that the FHFA would have overlooked such an important accounting item.  The path toward DTA recovery should have been clear, because both GSEs were profitable during the second quarter of 2002, both had stopped increasing their borrowings from the government and both comfortably covered their 10% dividends to the Treasury for that quarter.

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