And Jack Lew had better be putting a few ofthose billions the mortgage giants have been handing over for the past few years aside, because they might need them back.

The report from the inspector general for the Federal Housing Finance Agency, which regulates Fannie and Freddie, warns that the companies’ declining profits and capital cushions could leave them vulnerable in the event of an economic downturn….

The inspector general’s report noted that for the past few years, Fannie and Freddie’s net income has been driven by major legal settlements as well as the revaluation of tax assets and other one-time items that aren’t sustainable. That, along with the companies’ declining capital cushion, increases the likelihood they could need more government money in the future, the report said.

Fannie, Freddie Could Be at Risk of Needing More Government Funds [WSJ]
Earlier: Fannie, Freddie May Have Something To Share, Bill Ackman Thrilled Other People Are Suing Over Fannie, Freddie