Even though the two companies have paid Treasury about $250 billion over seven years, most of that was interest. They may still owe nearly $118 billion in principal.
FHFA Director Mark Calabria hopes to hire an advisor by next month. He said Fannie and Freddie will need to hire advisors too to help through the recap-and-release process or any possible public offering.
Fannie and Freddie will be able to retain all their second-quarter profits, rather than forward them to Treasury. Combined, the GSEs will add $5.2 billion to their net worth this month.
SOFR-linked debt is vulnerable to much higher rate volatility than those referencing LIBOR. This risk was highlighted last month when surging repo rates sent SOFR briefly to a record 5.25%.
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