Goldman Sachs (GS) Seeks To Buy Fannie Mae Tax Credits
Down)
Goldman Sachs Inc. (NYSE: GS) is attempting to purchase millions of dollars in tax credits from the financially battered firm, Fannie Mae (NYSE: FNM), according to reports from the Wall Street Journal. The move is seeing opposition from the U.S. Treasury, which could block the deal.
The treasury department has purchased $45.9 billion in preferred stock since it took over the company last year in an attempt to revive the firm by pumping money into it. This deal with Fannie Mae gives the taxpayers a large stake in the company.
Fannie Mae could use the relief that this deal with Goldman Sachs would provide. The move would give Goldman Sachs a reduced tax bill, making the government hesitant to approve the deal.
"Treasury is reviewing and will not let it proceed unless it is clearly in the taxpayers' interest," Treasury spokesman Andrew Williams said.
Fannie Mae purchased billions of dollars of low-income housing tax credits during the real-estate boom, and now after losing tens of billions of dollars, the company has no way to use them.
"There is decreased market demand for [such] investments because there are fewer tax benefits derived from these investments by traditional investors, as these investors are currently projecting much lower levels of future profits than in previous years," Fannie Mae said in an August filing with the SEC.
Goldman Sachs is hopeful that it will win its approval for the deal later this week.
"The only basis on which approval for any transaction would be given would be if it was clearly in the taxpayers' best interest," said Goldman Sachs spokesman Michael DuVally.
Shares of Goldman Sachs are up fractionally at $170.76 in pre-open trading. Fannie Mae stock is currently at $1.08 before the market opens today, also flat.
The treasury department has purchased $45.9 billion in preferred stock since it took over the company last year in an attempt to revive the firm by pumping money into it. This deal with Fannie Mae gives the taxpayers a large stake in the company.
Fannie Mae could use the relief that this deal with Goldman Sachs would provide. The move would give Goldman Sachs a reduced tax bill, making the government hesitant to approve the deal.
"Treasury is reviewing and will not let it proceed unless it is clearly in the taxpayers' interest," Treasury spokesman Andrew Williams said.
Fannie Mae purchased billions of dollars of low-income housing tax credits during the real-estate boom, and now after losing tens of billions of dollars, the company has no way to use them.
"There is decreased market demand for [such] investments because there are fewer tax benefits derived from these investments by traditional investors, as these investors are currently projecting much lower levels of future profits than in previous years," Fannie Mae said in an August filing with the SEC.
Goldman Sachs is hopeful that it will win its approval for the deal later this week.
"The only basis on which approval for any transaction would be given would be if it was clearly in the taxpayers' best interest," said Goldman Sachs spokesman Michael DuVally.
Shares of Goldman Sachs are up fractionally at $170.76 in pre-open trading. Fannie Mae stock is currently at $1.08 before the market opens today, also flat.
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