A recent report from the Inspector General of the Federal Housing Finance Agency implicitly warned Congress that, in their current configuration, Fannie Mae and Freddie Mac could need major future U.S. taxpayer bailouts.
The report did not recommend Congress take up secondary mortgage market reform, but it detailed observations regarding how the two mortgage giants remain vulnerable as currently organized.
First, the report pointed out that under their conservatorship terms, Fannie and Freddie must reduce the size of their retained investment portfolios. These retained portfolios provided the bulk of GSE income in the past. By the end of 2008, Fannie and Freddie's combined retained stood at $1.6 trillion, but had fallen to roughly $822 million by the end of 2014, the IG reported.
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