Goldman Seeks to Buy Fannie Tax Credits

Goldman Sachs Group(GS Quote) is in talks to buy millions of dollars in tax credits from Fannie Mae, but opposition from the U.S. Treasury could block the deal, The Wall Street Journal reported.

Goldman is hopeful of receiving the approval this week for the deal, which could bring some much-needed financial relief to Fannie Mae. The Obama administration, however, is opposed to the deal, as it will reduce Goldman's tax bill at a time when Wall Street is facing intense public and lawmakers' scrutiny, according to the report.

"Treasury is reviewing and will not let it proceed unless it is clearly in the taxpayers' interest," said Treasury spokesman Andrew Williams.

Being the owner and controller, the government vets and directs all major business decisions pertaining to Fannie Mae. The Treasury department purchased $45.9 billion of preferred stock in Fannie Mae last year to support the troubled firm, giving taxpayers a substantial stake.

Meanwhile, according to the report, Wall Street sources believe that Goldman could buy $1 billion worth of tax credits, allowing it to offset a portion of its profit. While financial details of the proposed transaction are not yet available, the article, citing sources familiar with the matter, says that Goldman could arrange other investors for the deal as well.