(Washington, D.C.) – Today, the Council for Citizens Against Government Waste (CCAGW) sent a letter to Congress expressing strong opposition to an attempt to include language into an upcoming mini-omnibus spending bill that would ratchet up the loans limits that Fannie Mae and Freddie Mac are permitted to purchase to $729,000.  The limit had dropped on September 30 to $625,000.

The Senate voted 60-38 on October 20 in favor of an amendment sponsored by Sens. Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.) to its fiscal year (FY) 2012 Transportation, Housing and Urban Development (THUD) Appropriations Bill that would raise the cap on the size of loan that can be purchased by Fannie Mae and Freddie Mac, the government-backed mortgage giants that have received a taxpayer-funded bailout of $169 billion to date.  The House has no such language in its version of the THUD bill, and the provision will be considered during conference to work out details of a mini- omnibus spending bill that includes THUD, the Commerce, Justice, and Science, and Agriculture spending bills.  This language, if passed, would irrevocably damage any efforts to fully unwind the two bankrupt government-sponsored enterprises, put more taxpayer money at risk, and subsidize the most affluent homebuyers in the country.  The letter from CCAGW Tom Schatz was sent to conferees on the mini-omnibus bill.  

Congress laid the groundwork for the collapse of Fannie Mae and Freddie Mac through subsidized housing policies and ill-considered affordable housing goals.  As a result, Fannie and Freddie went belly-up, leaving taxpayers with an expensive mess.  While lawmakers have been focused on Wall Street reform, little has been done to address the failed mortgage giants that played such pivotal roles in the nation’s economic collapse. 

“During an economic crisis that is largely thanks to the federal housing giants, there is simply no justification for raising the loan limit,” said Schatz.  “With a limit of $729,750, it is clear that this program no longer aims to help just middle-class homeowners; it is a blatant attempt to keep the government in the mortgage industry.  A $729,750 loan limit is a sop to the most affluent homebuyers in the country.  The only way for Congress to rescue the drowning housing market is to step aside; the federal government should not be running a mortgage business, nor should it be gambling with taxpayers’ hard-earned dollars when the private sector has the capability and expertise to assess risk and grant loans for those who qualify.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.