As Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) posted its ninth straight quarterly profit, a whopping $10.4 billion dividend, one might think shareholders would be thrilled.  That would be normally be the case, except that the US government took control of Freddie Mac after the 2008 mortgage-led financial crisis and has been putting the profits in the US Treasury ever since.

Freddie Mac

Freddie Mac posts largest annual profit in history

Total earnings for the second-largest mortgage finance company were $48.7 billion in 2013, its highest annual profit in its history.  Its net income was $11 billion the previous year.

When the fourth quarter dividend payment is made, Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) will have paid nearly $81.8 billion after receiving a $71.3 billion bailout loan from the government.  While the government initially said it would release the firm back to shareholders after the bailout was repaid, that remains in doubt, as noted in ValueWalk.  In that article, bank analyst Dick Bove said that a price of $18 per share wouldn’t be out of the question given earnings, a nearly four times increase over its current price.

Government misstatements

Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) and its smaller “brother” Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) have been operating under federal conservatorship since 2008, when both organizations were near insolvency when the government offered a bailout.  Just before the firms imploded, government regulators made public statements that there was “nothing to worry about.” Shortly after making this statement, the two firms collapsed.  After the collapse, the government promised to return the stock to shareholders once the bailout was repaid, but that promise looks like it might have been made in bad faith, with Dick Bove saying yesterday that the government “reneged” on its initial deal.

The Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) earnings come on the back of record earnings from Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA), which yesterday said it would send $7.2 billion to the US Treasury.  When the government receives its current payments, it will have received a total of $202.9 billion.  The government provided $187.5 billion in initial bailout funds.