Us housing finance firms could need big bailout in a recession regulato

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WASHINGTON U.S. housing finance firms Fannie Mae and Freddie Mac could require up to $157.3 billion in taxpayer funds if the United States entered a severe recession, their regulator said on Thursday. The Federal Housing Finance Agency released the estimate as part of an annual stress test of the two firms, which were bailed out by the government during the height of the 2007-09 financial crisis and have been run by the government since. Fannie Mae and Freddie Mac guarantee most new U.S. mortgages and their capital is central to the country's housing market.

The FHFA analysis relies heavily on U.S. home price projections and is modeled on the stress tests conducted on the nation's biggest banks. Under their bailout agreement with the government, Fannie Mae and Freddie Mac must sweep their profits into the Treasury and cannot rebuild capital that would cushion any sudden shock to the financial system.

Regulators took control of Fannie Mae and Freddie Mac in 2008 after losses stemming from subprime mortgage investments pushed them to the brink of insolvency.