Treasury Nixes Sale of Fannie Credits

The U.S. Treasury Friday blocked the proposed sale of as much as $1 billion in Fannie Mae(FNM) tax credits to Goldman Sachs(GS), according to published media reports.

The government said the proposed deal would lead to a net loss for taxpayers, according to a report in The New York Times.

Goldman Sachs had agreed to pay cash for the tax credits, which Fannie Mae cannot use right now because it is losing money and thus has no taxable income, the report noted.

The report quoted an administration official saying, "It is our view that the proposed sale would result in a loss of aggregate tax revenues that would be greater than the savings."

The official was referring to the potential lost tax revenue from Goldman if it used the tax credits.

A government-sponsored enterprise, Fannie Mae came close to collapsing during last year's financial crisis. The government placed the mortgage giant into conservatorship in September 2008 and has pumped tens of billions of dollars into it.

Fannie Mae Thursday reported a $19.76 billion loss for the third quarter and asked the government for another $15 billion in aid.

Shares of Fannie Mae closed Friday at $1.04.

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