Freddie Mac Will Pay U.S. $900M on 4Q Profit

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Freddie Mac will return $900 million to the Treasury Department next month, bringing total payments to nearly $21 billion above what it received in federal aid after the 2008 credit crisis.

The McLean, Va.-based company had net income of $227 million for the quarter ended Dec. 31 and a profit of $7.7 billion for all of 2014, according to a regulatory filing Thursday. Freddie Mac earned $47.8 billion in 2013, which was inflated by one-time accounting changes and settlements of securities litigation.

Last year was “another year of solid financial and operating performance for Freddie Mac, enabling us to return an additional $20 billion to the nation’s taxpayers,” Donald H. Layton, the company’s chief executive officer, said in a statement. “We made tremendous progress in materially reducing taxpayer exposure to risk.”

The company’s results in the fourth quarter were driven by net interest income of $3.6 billion and a loss on derivatives in its investment portfolio of $3.4 billion. Freddie Mac, which is under orders by its regulator to wind down its investments, lost $8.4 billion on derivatives in 2014, driven by declines in interest rates.

Freddie Mac is required to pay Treasury all profits in return for the $71 billion U.S. bailout it received after it was taken into U.S. conservatorship along with larger rival Fannie Mae in 2008. The money counts as a return on the U.S. investment and not as repayment, and there is no existing mechanism for the company to exit government control.

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