So Long Buyback Plague?

The megabanks have spoken! Both Wells Fargo & Co. and JPMorgan Chase this week declared that big ticket loan repurchase demands from Fannie Mae, Freddie Mac and other secondary market investors may soon be a thing of the past. (See our reports on the NMN website.) Of course, loan repurchases have been with the industry for decades, but only became financially meaningful with the housing bubble, which blew a multi-trillion dollar hole in the economy. But regarding buybacks, there is something else to ponder. If loan buybacks are peaking, that means Fannie and Freddie may be through the worst of it, and if they are, will one or both soon post a quarterly profit? My guess is that yes, one of them will. But there is one  major obstacle standing in their way: dividend payments to the U.S. Treasury.