U.S. Says Fannie Mae, Freddie Mac Adequately Capitalized

The U.S. government agency that oversees mortgage finance providers Fannie Mae and Freddie Mac said on Friday that both companies were adequately capitalized as of Dec. 31, 2006.

Both Fannie and Freddie had capital reserves that topped the temporary, 30% surplus mandated by the Office of Federal Housing Enterprise Oversight.

Fannie Mae had a 10.9% surplus above the mandated level, while Freddie's reserves were 7.7% above the 30% surplus ordered since the companies were shaken by accounting scandals.

The classification "adequately capitalized" is the highest of four levels in the regulator's ratings system.

Investors have pushed the companies to return some of their cash reserves to shareholders.

OFHEO said Fannie had $16.1 billion in excess capital while Freddie had $21.4 billion in excess at the end of the year.