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U.S. President Barack Obama announces Democratic Representative Mel Watt (L) as his nominee for director of the Federal Housing Finance Agency at the State Dining Room of the White House in Washington, May 1, 2013. Obama on Wednesday nominated Watt, a longtime consumer advocate, to oversee mortgage financiers Fannie Mae and Freddie Mac, a White House official said.
U.S. President Barack Obama announces Democratic Representative Mel Watt (L) as his nominee for director of the Federal Housing Finance Agency at the State Dining Room of the White House in Washington, May 1, 2013. Obama on Wednesday nominated Watt, a longtime consumer advocate, to oversee mortgage financiers Fannie Mae and Freddie Mac, a White House official said.
(Jason Reed/Reuters)

FINANCIAL TIMES

Investors circle Fannie and Freddie in hopes of privatization

Lex is a premium daily commentary service from the Financial Times. It helps readers make better investment decisions by highlighting key emerging risks and opportunities.

The U.S. Congress does not get much done these days. But gridlock is working just fine for Fannie Mae and Freddie Mac. They delivered $12.1-billion (U.S.) in profits last quarter. By the terms of Treasury’s $190-billion bailout of the mortgage securitisers, that money (and all of the pair’s future profits) is owed to Uncle Sam. And there is more to come for taxpayers if the housing revival continues and lawmakers’ dysfunction keeps Fannie and Freddie in their current form.