From the FINANCIAL TIMES:
It has been a profitable financial crisis for the US Treasury, at least in terms of the distressed assets it purchased in 2008 and 2009…
On the heels of making money from selling stakes in AIG and Citi, the US Treasury estimates that it stands to generate between $15bn and $20bn in profit from the sale of mortgages over the next year. Some, such as Richard Gilhooly, strategist at TD Securities, estimate that these numbers may be conservative.
This reflects the fact that the Treasury bought mortgages and debt issued by Fannie Mae and Freddie Mac, the government-backed mortgage financiers, when the securities were trading at very wide levels over US government bond yields, a spread that has subsequently shrunk as sentiment in the market has improved…
Click here to read the full article.
EDITOR’S NOTE: When the National Recovery Act was being put together in 2008, Warren Buffet predicted on the Charlie Rose Show (and NewsLanc duly reported) that the federal government would profit from its investments and indicated he would be pleased to participate in the acquisitions. So things are turning out.
