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Goldman Deal May Bail Out Fannie Mae

But letting superbank load up on tax credits could be politically toxic

By Kevin Spak,  Newser Staff

Posted Nov 2, 2009 9:12 AM CST
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(Newser) – Goldman Sachs wants to buy millions in otherwise virtually worthless tax credits from Fannie Mae, but the mega-bank is so politically toxic right now that the Obama administration is considering blocking the deal, the Wall Street Journal reports. “Treasury is reviewing and will not let it proceed unless it is clearly in the taxpayers’ interest,” a department spokesman said.

Fannie picked up the tax credits for financing low-income housing, but because Fannie isn’t currently profitable, they’ve been dead weight on its balance sheet. Some believe Goldman wants to pick up as much as $1 billion worth. But it’s unknown how much Goldman’s willing to pay; if the deal seems too sweet, it could stoke criticisms that the government has given Goldman preferential treatment, allowing them to recover and profit handsomely on the taxpayers’ dime.

In this May 2, 2007 file photo, the Fannie Mae building in Washington is seen.
In this May 2, 2007 file photo, the Fannie Mae building in Washington is seen.   (AP Photo/Manuel Balce Ceneta, File)
Charts shows quarterly earnings for Bank of America, Citigroup, JPMorgan Chase & Co. and Goldman Sachs Group Inc. since the third quarter of
Charts shows quarterly earnings for Bank of America, Citigroup, JPMorgan Chase & Co. and Goldman Sachs Group Inc. since the third quarter of
Lloyd C. Blankfein, CEO of Goldman Sachs, speaks at a luncheon at United Nations headquarters in this file photo.
Lloyd C. Blankfein, CEO of Goldman Sachs, speaks at a luncheon at United Nations headquarters in this file photo.   (AP Photo/David Karp, file)
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COMMENTS
Showing 3 of 5 comments
Guava_Jelly
Nov 2, 2009 4:37 AM CST
Anyone who buys these tax credits (such as Goldman) is essentially endorsing the bad lending practices which put the economy in the tank in the first place. As long as there's a buyer, the bad lending practice will continue AND the American tax payer will continue to fund bad loans (i.e. low income lending) through these continued tax incentives. The buying of Fannie's tax credits IS NOT a solution...the cycle will repeat again as soon as loans default. Stop the bad lending!!!
fancygapva
Nov 2, 2009 4:35 AM CST
Our government regulators WORKED for Goldman Sachs or other similar companies and they STILL do, they will just collect their salaries when they leave office. The BLEEDING is money in their pockets. They will FIND a way to make money out of any disaster that hits the poor and middle class. Geithner was and is a mistake that should be corrected although he's dug us in such a deep hole I don't know that we'll ever get out. Just look below at Related Newser Stories and go take a valium.
gilgordan
Nov 2, 2009 4:02 AM CST
This is a topper, first Goldman over the last 20 years markets tax credits driving up the value, now that market for them is diminished wants to bottom feed them for sale at a higher value when tax rates rise. All at the cost of taxpayers, the first thing is the tax credit program for low income housing was a scam, not this perpetuates it even further. When will our government regulators wake up and stop the bleeding.

 
Goldman Sachs • Fannie Mae • Treasury Department • tax credit • bailout

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