U.S. Treasury Secretary Jacob J. Lew said a one-time payment from Fannie Mae confirms that the nation’s debt ceiling won’t be reached until September.
“The one-time payment that Fannie Mae has announced makes it very clear that we’re not going to hit the effective deadline until at least Labor Day,” he said in an interview on CNBC Television in London today. “The statutory debt limit will be reached in just a few days” and “because of the extraordinary measures that are available and cash flows that we now can predict it will not be until at least after Labor Day,” which falls on Sept. 2 this year.
Fannie Mae, the mortgage-financier seized by U.S. regulators in 2008, said yesterday it will pay the Treasury $59.4 billion after reporting a record quarterly profit driven by rising home prices and declining delinquencies.
The U.S. Congress voted at the end of January to suspend the nation’s $16.4 trillion debt limit through May 18, temporarily removing the risk of a default. When the ceiling is restored May 19, it will be increased to reflect the government’s borrowing during the past few months.
The Treasury Department can continue borrowing for several months by shifting money among government accounts.