I have written about Fannie Mae, Freddie Mac and their regulator, the Federal Housing Finance Administration, on two previous occasions. In those guest columns, I wrote that Fannie Mae and Freddie Mac — together referred to as the government sponsored enterprises or GSEs — while not necessarily public utilities per se, are regulated firms and present interesting regulatory issues.

Fannie Mae and Freddie Mac continue to play a vital role in housing.

The GSEs will soon be able to pay taxpayers back for the funding they provided when no one else was willing to. The GSEs have become dramatically profitable, with most of their earnings “swept” as dividends on the senior preferred stock held by the U.S. Treasury on behalf of taxpayers.

Prior to August 2012, the GSEs paid a 10 percent dividend on the senior preferred stock, but to pay that high dividend rate, the GSEs often had to “draw” on the U.S. Treasury to raise the cash needed to pay the U.S. Treasury. The expectation was that it would take at least 10 years for the GSEs to repay taxpayers.

That changed with the third amendment to the amended and restated senior preferred stock purchase agreement dated Aug. 17, 2012. Rather than pay a 10 percent dividend, there is a “sweep” of earnings to the U.S. Treasury.

With that change, the expected time to repay taxpayers’ “net investment” shortened to four or five years or less.

The expected payback to taxpayers’ net investment in the GSEs has, more recently, shortened enough so repayment of net investment is expected in 2013 or the first quarter of 2014.

This startling development was the result of Fannie Mae’s ability to reverse out the valuation allowance associated with its deferred taxes.

In very simple terms, because of its past losses, the GSEs will owe little income tax for the next several years. This led to a $59.4 billion payment by Fannie Mae to the U.S. Treasury at the end of June 2013 and a $7.0 billion payment by Freddie Mac.

Note that Freddie Mac has not yet reversed out any of its deferred tax valuation allowance. The rapid repayment of taxpayers’ net investment in the GSEs has been great for U.S. taxpayers.

The GSEs are not allowed to formally repay principal on the senior preferred stocks. Thus, while taxpayers’ net investment — that is, draws on the U.S. Treasury less dividends to the U.S. Treasury— may soon be zero or less, the U.S. Treasury’s senior preferred stock remains outstanding and all of the GSEs’ earnings will continue for the foreseeable future.

On behalf of the GSE’s common and preferred shareholders (Disclosure: I now own some preferred shares in the GSEs), five lawsuits have been filed challenging aspects of the conservatorship of the GSEs based on takings, due process,and other claims.

The economic regulation of investor-owned firms, whether public utilities or the GSEs, is based on a “regulatory compact” that requires that the regulated firms provide safe, adequate and reliable service to their customers.

In return, regulated firms have the opportunity to recover their costs of doing business as well as a fair rate of return on their investment.

In the case of the GSEs, however, essentially all earnings are now swept to pay dividends on the senior preferred stock, leaving the GSE’s common and junior preferred holders high and dry.

This begs the question of whether there has been a violation of the U.S. Constitution’s 5th Amendment prohibition against takings without just compensation.

The U.S. Treasury is understandably interested in ensuring taxpayers’ net investment is repaid.

The regulation of Fannie Mae and Freddie Mac continues to shine an interesting light on the economic foundations of public utility regulation.

WAYNE P. OLSON, a former Brunswick resident, is the author of the forthcoming book “The A to Z of Public Utility Regulation.