Fannie Mae and Freddie Mac's profits utterly depend on having their obligations backed by the U.S. Treasury — and thus by taxpayers. Without the Treasury's effective guarantee, Fannie and Freddie would be unable to remain in business, especially with the capital of approximately zero they have had since 2008.

This is obviously an extremely valuable guarantee, and various people have argued over the years that Fannie and Freddie ought to be paying a fee to the Treasury for it. They are right. Fannie and Freddie make large profits by getting a free ride on the Treasury's credit. If they instead had to pay a sensible price for this backstop, what would their adjusted profits be?

I'm referring to the profits before any consideration of the dividend they pay on their senior preferred investment from the Treasury in the 2008 bailout. That dividend has consisted of 100% of their profits since the government changed the deal in 2012.

One could reasonably say that the profits sweep pays for the Treasury guarantee — but under this arrangement, Fannie and Freddie are doomed to stay in government conservatorship forever. Nobody wants that. So we need to separate payment for the Treasury's credit from the question of the senior preferred stock. With that achieved, we can sensibly go back to the original senior preferred stock deal, with a dividend of 10%.

The calculation is straightforward once we decide on a sensible price for the government's guarantee of highly leveraged financial institutions' obligations. Fortunately, we have a readily available guide for this price: "deposit insurance premiums," which are fees that banks pay for a government guarantee. These fees are charged not just on insured deposits, but on the total liabilities of the institution.

For big banks, this includes very large amounts of borrowings that are not deposits. The rationale is that if banks are "too big to fail," they benefit from a general Treasury backstop on all of their obligations. The bailout of Fannie and Freddie conclusively demonstrated that they are TBTF themselves and that they benefit from the government guarantee on all of their obligations. Therefore they ought to pay the way that big banks do.

The FDIC's guarantee fees depend on whether the bank in question is adequately capitalized or undercapitalized. Holding zero capital distinctly qualifies Fannie and Freddie as undercapitalized. Then there are two possible FDIC fee categories: Risk Category III and Risk Category IV. The annual fees in Category III run from 18 to 33 basis points, multiplied by an institution's total liabilities, and in Category IV from 30 to 45 basis points — in other words a total range of 18 to 45 basis points. Let us give Fannie and Freddie the benefit of the doubt and put them in the less expensive Category III. Let us further put them at the very lowest fee in this category: 18 basis points.

Now for their free-ride-adjusted profits. In the first quarter of 2015, Fannie's net profit was $1.9 billion, and Freddie's was $524 million. Both amounts were far lower — and more normal than — the GSEs' prior-year profits of $5.3 billion and $5.8 billion, respectively, which were achieved as a result of special, non-recurring items. Combining and annualizing the GSEs' first-quarter profits in 2015 puts them at a total of $14.2 billion in pretax profits for the year, or $9.6 billion after taxes.

The current free-ride-adjusted net profit represents a minuscule return on assets of 0.06%before the senior preferred dividend. That is Fannie and Freddie's value added when they don't get the Treasury's credit for free, and instead pay for the guarantee like other TBTF institutions.

An annual fee of 18 basis points for Treasury's credit backup should be imposed on Fannie and Freddie immediately. Then all market and government actors, including investors, can assess their free-ride-adjusted profits. The proposed fee is probably less than the economic value of this guarantee, but it is a reasonable level that establishes a parity of treatment with other institutions that enjoy a massive government credit backup of their liabilities. Once it establishes the fee, the government should let Fannie and Freddie go back to the original 10% dividend on their senior preferred stock. This may provide us with a way out of eternal conservatorship.

Alex J. Pollock is a resident fellow at the American Enterprise Institute in Washington. He was president and chief executive of the Federal Home Loan Bank of Chicago from 1991 to 2004.