(Washington, D.C.) - Citizens Against Government Waste (CAGW) today applauded the Office of Management and Budget (OMB) for calling for enhanced corporate governance of the nation’s two largest Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac.  On Wednesday, a letter from OMB was sent to the GSEs’ safety and soundness regulator, Office of Federal Housing Enterprise Oversight (OFHEO), urging a rulemaking that would require the GSEs to publicly disclose financial information to the SEC in the same format as other publicly-traded Fortune 500 companies. 

"By taking this action, the OMB is trying to safeguard the interest of both GSE stockholders and the taxpayers," CAGW Vice President Leslie K. Paige said.  "The GSEs must be held to the same standards as other publicly traded companies.  It is patently absurd that we permit these two companies, and only these two companies, to decide which information they deem important enough to disclose, and the manner and timing of that disclosure.  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 umbrella of accountability."

Currently Fannie Mae and Freddie Mac are not required to disclose the same routine financial reports and materials that are required of other publicly traded companies when changes occur in their financial status.  However, they do voluntarily release some information, though this standard procedure could change at any time.

"The two GSEs have a combined debt worth $1.26 trillion, up from $518 million in 1997, an annualized growth rate of nearly 25 percent," Paige also said.  "Fannie's balance sheet is bigger than the Federal Reserve, and the two combined out-borrowed the U.S. Treasury by $1.1 trillion in 2001.  In addition, according to the OMB, the GSEs' outstanding obligations total $3.1 trillion, yet they 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."

"Fannie and Freddie claim to already be providing ample financial information, so it is difficult to understand why they would oppose these measures," Paige concluded.  "Registration and regular reporting will provide investors, Congress, and taxpayers with better information on how these companies do business, what financial risks they face, and how they manage those risks."

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.