FNMA and FHLMC Rates of Return

Pursuant to a congressional request, GAO provided information on how the rates of return for the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) compared with the financial industry and corporate sector between 1991 and 1995. GAO noted that: (1) while Fannie Mae's and Freddie Mac's rates of return on total capital assets and common equity declined steadily, the financial industry's and corporate sector's rates of return increased in each of those years; (2) while Fannie Mae's and Freddie Mac's investment earnings generally declined, the financial industry's and corporate sector's earnings increased; (3) using rate of return on total capital, common stock equity, and earnings yield could be useful in evaluating Fannie Mae's and Freddie Mac's financial performance; and (4) Fannie Mae's and Freddie Mac's rates of return remained high in 1991 and 1992 despite the relatively poor performance of the U.S. economy because they are not as cyclical as other companies.