(Washington, D.C.) – On Friday, Citizens Against Government Waste (CAGW) applauded with caution the agreement by Fannie Mae and Freddie Mac to register their common stock with the Securities and Exchange Commission (SEC).  The deal with the SEC and Treasury Department would require the nation’s two largest government sponsored enterprises (GSEs) to publicly disclose more financial information as critics on Capitol Hill have called for in wake of the recent accounting scandals.

“This is definitely a move in the right direction,” CAGW Vice President Leslie K. Paige said.  “However, it is only a small step.  Until Fannie and Freddie agree to full disclosure with the SEC, there are still great risks involved.  The collapse of Enron is teaching us new lessons about the critical importance of transparency and full disclosure; Fannie and Freddie must be brought under that same umbrella of accountability."

Despite the recent agreement, Fannie and Freddie still do not have to register their debt and mortgage-backed securities with the SEC, as do all other publicly traded companies.  The two GSEs have a combined debt worth $1.26 trillion, up from $518 million in 1997, and an annualized growth rate of nearly 25 percent.  Fannie's balance sheet is bigger than the Federal Reserve, and the two GSEs combined out-borrowed the U.S. Treasury by $1.1 trillion in 2001.  In addition, according to the Office of Management and Budget, the GSEs' outstanding obligations total $3.1 trillion.  They also enjoy a $10 billion financial windfall each year as a result of tax breaks, SEC exemptions, and the implied backing of taxpayers in case of failure.

“In order to have full competition in the industry, it is only fair Fannie and Freddie provide total disclosure to the SEC,” Paige continued.  “Such information is even more important for the GSEs because if there is a catastrophe, similar to that of Enron, it will be the taxpayers left holding the bag.  The public has a right to know the financial dealings of Fannie Mae and Freddie Mac, as it is their money that is at stake.  I urge the SEC, Congress, and the Administration to ensure that this full oversight takes place immediately.”

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