Fannie Mae and Freddie Mac could need a taxpayer bailout of as much as $99.6 billion if a severe economic downturn gripped the U.S., their regulator said yesterday, according to a MarketWatch.com report. The Federal Housing Finance Agency released the results of a stress test that examined how the mortgage finance companies would perform in what’s called a “severely adverse scenario.” The stress test was mandated by the post–financial crisis Dodd-Frank Act and the specifics of the scenario were devised by the Federal Reserve. The test found that Fannie and Freddie together would require between $34.8 and $99.6 billion, FHFA said. That’s an improvement from last year, when FHFA said the enterprises would need $125.8 billion. The two government-sponsored enterprises have operated under federal conservatorship since the 2008 crisis. In 2010, the Obama administration amended that 2008 agreement to require that Fannie and Freddie send all their profits to the Treasury and draw down remaining capital buffers until they reach zero in 2018.
