In letters to Fannie and Freddie Mac this month, Watt wrote he didn't consider the tax-cut losses "to relate to any financial instability" in the companies "either now or in the future".
To eliminate the resulting net-worth deficit, the company said it expects the Federal Housing Finance Agency, its regulator, to submit a request to the Treasury for $3.7 billion.More news: Better late than never as Lamichhane leads Nepal to World Cup qualifiers
Due to the terms of its first taxpayer bailout, Fannie Mae operates with limited capital stores, which is why it can not pay for the loss on its own.
According to the financial news site, Fannie and Freddie have together paid about $90 billion more to the U.S. Treasury than they received during the 2008 crisis. Put simply, the government required Fannie and Freddie to send nearly all of its profits to the Treasury.
Fannie Mae has a line of credit with the Treasury Department, and even after taking out $3.7 billion, it would still have $113.9 billion remaining on its credit line.More news: Phillips 66 OKs $3.3 Bln Share Buyback from Berkshire Hathaway
If approved, it would be the first time the government put capital into Fannie since March 2012.
Fannie Mae reports it had net revenues of $5.5 billion in the the fourth quarter, versus $6.2 billion in the fourth quarter of 2016. "As it turned out, [that money] was not enough to cover the losses it suffered in the fourth quarter thanks to the Republican tax plan", HousingWire said. For full-year 2017, Fannie Mae posted a net income of $2.5 billion, down from $12.3 billion in 2016.
"Our 2017 results demonstrate that the fundamentals of our business are strong", Mayopoulos says.More news: High Court Revokes Miguna Miguna's Deportation to Canada
Watt said that although the companies were on much better footing, financially, since the meltdown of 2008, the incremental draw-down of their taxpayer buffer meant there was greater risk of the need for a taxpayer bailout.