Freddie Mac Rocks. Is Congress Watching?

McLEAN, VA-In response to a request from Freddie Mac, Standard & Poor's has rated the GSE's master servicer operations "Above Average." Last November, Freddie Mac received an initial CMB special servicer rating of "CSS2-" from Fitch Ratings, again in response to Freddie Mac's request to be rated.

Freddie Mac is seeking out these ratings to give the investment community an impartial look at its operations, a spokeswoman from the GSE tells GlobeSt.com. "We wanted the industry to know how strong our asset management capabilities are. It helps the market have confidence in us."

The ratings are also good benchmarks for future performance, she adds. The spokeswoman declined to say directly whether Moody's Investor Service would be rating Freddie Mac, but did note "we are looking at all areas in this space for ratings."

The S&P rating follows another profit-making quarter--its sixth to date since the crash--in which it posted $4.6 billion from January through March. For the same quarter a year ago, it posted net income of $577 million.

All of this good news suggests that reform of the GSEs--that is, releasing them into the private sector--will be put on the back burner. This is not the first time this particular theory has been floated--that as the GSEs become cash cows again the government will be loathe to let them go.

The most recent voice to express this thought is Keefe, Bruyette & Woods, which recently opinioned that "reliance on these revenues in the current budget environment makes it tougher to unwind the GSEs and transition to a new mortgage finance system. In Washington, budget politics often trumps other policy considerations." (Hat tip to MarketWatch).