This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Deutsche Bank Settles with Fannie and Freddie for $1.9 Billion

NEW YORK ( TheStreet) -- Deutsche Bank (DB - Get Report) on Friday announced an agreement with the Federal Housing Finance Agency (FHFA) to resolve all claims against the bank for all sales of residential mortgage-backed securities to Fannie Mae (FNMA) and Freddie Mac (FMCC) between 2005 and 2007.

Deutsche Bank agreed to pay $297 million to Fannie Mae and $1.628 billion to Freddie Mac, for a total settlement tab of $1.925 billion.

Fannie and Freddie -- together known as the government sponsored enterprises, or GSEs -- were taken under government conservatorship at the height of the credit crisis in September 2008.  The U.S. Treasury holds $117.1 billion in senior preferred Fannie Mae shares and $72.3 billion in senior preferred Freddie Mac shares. Under their modified bailout agreements, the GSEs must pay all earnings to the government in excess of minimal capital cushions of $3 billion apiece. Including their December dividend payments, the government has received $185.3 billion in dividends from Fannie and Freddie, for a five-year investment of $189.4 billion.

But there's no mechanism in place for either GSE to repurchase any government-held preferred shares.  Several institutional investors holding junior preferred and/or common shares of Fannie and Freddie have sued the government over what they say has been an illegal seizure of their property. 

Consumer advocate Ralph Nader is firmly on the side of the GSEs non-government shareholders

The FHFA sued 17 banks in September 2011 seeking to recover billions of dollars on behalf of the GSEs for alleged misrepresentation by the banks of the quality of loans underlying private label mortgage-backed securities the banks had sold to Fannie and Freddie during the U.S. housing credit bubble before 2008.

Big banks agreeing to major settlements with the FHFA this year have included JPMorgan Chase (JPM), which agreed in October to fork over $5.1 billion to the GSEs, and Bank of America (BAC), which agreed in January to a $10.3 billion mortgage settlement with Fannie Mae.

Shares of Deutcshe Bank were up 1.4% in morning trading to $46.57, while Fannie Mae was up 1.9% to $3.20 and Freddie Mac was up 2.7% to $3.05.

Stocks were strong Friday Morning after the Bureau of Economic Analysis once again raised its estimate for third-quarter U.S. gross domestic product growth, to an annual rate of 4.1%, from its previous estimate of 3.6%.

-- Written by Philip van Doorn in Jupiter, Fla.



>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DB $29.67 0.00%
FNMA $2.28 0.00%
AAPL $113.29 0.00%
FB $91.01 0.00%
GOOG $630.38 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs