Fannie, Freddie Takeover Hits CT Pension Funds

Connecticut’s pension funds stand to lose more than $50 million on stock they hold in Fannie Mae and Freddie Mac, the quasi-governmental mortgage lenders that were taken over by federal regulators last week.

The book value of the pension funds’ Fannie and Freddie stock is about $54 million. But as a result of the takeover, that value has eroded to about $1 million, State Treasurer Denise Nappier said in a prepared statement.

The Fannie and Freddie shares represent only about two-tenths of one percent of the state treasury’s entire investment portfolio, Nappier noted.

Despite the loss, Nappier said, “the overall integrity of our investment portfolios remains intact.”

Connecticut’s pension funds also hold about $1.8 billion in Fannie Mae and Freddie Mac debt instruments.

And the state treasury holds about $1.58 billion of Fannie and Freddie debt in other portfolios, including its short-term investment funds.

“The U.S. Treasury’s takeover has clearly strengthened the implied guarantee that this debt will be paid,” Nappier said in the press release. “So from this vantage point, the takeover is a good thing.”