Fannie, Freddie get OK to raise capital

Fannie Mae and Freddie Mac will be allowed to boost their capital by billions of dollars to protect against potential losses, a key step in the Trump administration’s push to free the mortgage giants from U.S. control.

Fannie will be permitted to retain earnings until its capital buffer hits $25 billion, while Freddie will be allowed to hold $20 billion, the Treasury Department and the Federal Housing Finance Agency announced Monday.

Last year, Fannie reported net income of $16 billion and Freddie made $9.2 billion, signaling that it could take more than a year for the companies to reach the administration’s new goal.

Treasury and FHFA, Fannie and Freddie’s regulator, also committed to making more changes to the bailout agreements that were struck after the companies were rescued with taxpayer funds at the height of the 2008 financial crisis.

The moves are part of an effort, outlined in a plan released by Treasury last month, to end the companies’ decadelong conservatorships and return them to the private market.