Freddie Mac May Need Another Taxpayer Bailout this Week

Andrea Riquier | MarketWatch

The mortgage giant under government control is expected to report a Q1 loss thanks to interest rate derivative bets.

Freddie Mac is expected to report a loss when it announces first-quarter earnings before the bell on Tuesday. That’s bad news for any public company, but especially critical for the mortgage provider because of its tangled history with the federal government.

moneyhole_small Freddie Mac May Need Another Taxpayer Bailout this Week

Freddie and its counterpart, Fannie Mae, were put into conservatorship in 2008 as the mortgage meltdown ensnared the financial system. They have lingered as wards of the state ever since. The Treasury Department modified the deal in 2012, requiring Fannie and Freddie to send all quarterly profits to the government — and shrink their reserves to zero by 2018.

As Mel Watt, the chairman of Fannie and Freddie’s regulator, put it in a speech in February, Fannie and Freddie are quickly approaching the point where they won’t be able to weather quarterly losses without going back to the Treasury for taxpayer dollars.