A US appeals court appeared unlikely on Friday to overturn an order requiring Nomura Holdings Inc and Royal Bank of Scotland Group Plc to pay USD 839 million for making false statements while selling mortgage-backed securities to Fannie Mae and Freddie Mac.
Fannie Mae's chief executive and its regulator are sounding the alarm on a decline in the institution's capital cushion, which is on course to vanish in 2018, when it would have to ask the US Treasury for emergency funds.
The Congressional Budget Office on Friday forecast a USD 195 billion US budget deficit for the first four months of the current fiscal year, up from USD 183 billion in the same period last year.
The Federal Housing Finance Agency, which oversees Fannie and Freddie, announced the settlement yesterday with the Wall Street powerhouse.
Edward DeMarco, the acting director of the Federal Housing Finance Agency, said in a statement the resolution provides â€œgreater clarityâ€ and helps preserve the assets of the two companies. Fannie Mae and Freddie Mac were taken over by the government in 2008 and have been kept afloat with taxpayer dollars.
The lawsuit, filed in US District Court in Washington, alleges that the Treasury and the regulator for Fannie Mae and Freddie Mac violated a 2008 law that put the two mortgage companies into conservatorship as they faced insolvency at the height of the US financial crisis.
The US government has sued Bank of America for USD 1 billion on allegations of a multi-year mortgage fraud.
In considering how to fix the ailing US housing market, Republicans and Democrats in Washington have found a rare point of agreement: they would prefer life without failed mortgage giants Fannie Mae and Freddie Mac.
Within months after taking over as chief lobbyist at mortgage lender Freddie Mac in 1999, Mitchell Delk hired a prominent Washington insider to advise him on how to build support among conservatives on Capitol Hill: Newt Gingrich, the former speaker of the House of Representatives.
The White House expects to shovel close to USD 90 billion to Fannie Mae and Freddie Mac over the next few years, though they are expected to start paying back more than they receive as of next year, according to the 2012 budget plan proposed on Monday.