Ed Haldeman, Jr.
Chief Executive Officer, Freddie Mac
Excerpt from remarks to Boston College’s Chief Executives’ Club of Boston
October 26, 2011
TAKEAWAY: PAYING BACK TAXPAYERS
It’s a great question [whether Freddie Mac will be able to pay back the money it received during the 2008 government bailout], and you’re right, you’re pretty accurate. It’s just about $65 billion. And in my remarks, I talked about how it was going to be difficult under the current financial arrangement to pay that back anytime soon, certainly.
One of the parts that you’ve got to understand is that our interest on that $65 billion is 10 percent a year, so our annual preferred dividend payment is $6.5 billion annually.
So, it is a big number. Our view is that what happens to that debt, it will be decided through the political process. It will be part of that thinking about, what is the right answer for Freddie Mac, what is the right answer for the housing finance market going forward. But in the interim, we continue to make that payment of $6.5 billion.
To the extent that we pay that dividend each quarter, so the quarterly payment is about $1.6 billion—if we don’t meet it, then of course, that $65 billion can get bigger.