(Washington D.C.) – Citizens Against Government Waste (CAGW) today blasted Fannie Mae and Freddie Mac in response to reports of alleged threats made by the two Government Sponsored Enterprises (GSEs) against critics in the mortgage banking business.  Several large banks and financial-services firms reported being threatened by Fannie Mae and Freddie Mac for criticizing the market power and expansion efforts of the two mortgage finance giants, according to the Wall Street Journal this week.

“Where is Joel Klein when we need him?” CAGW Vice President Leslie K. Paige said.  “The same government that spent at least $35 million – to say nothing of wasted time and brain power – needlessly harassing Microsoft, an innovative and consumer-friendly company, continues to fortify Fannie Mae and Freddie Mac with massive tax breaks.  Congress needs to exert its oversight authority and not let these quasi-government agencies parade around like the Sopranos of the financial world.”

“That Fannie and Freddie are allegedly using their government-enhanced positions to strong-arm detractors is no surprise: Subsidies breed arrogance and abuses,” Paige added.  “This is of concern not only to free-marketeers, congressional leadership, and friends of the private banking and investment industries, but to every taxpaying American who worries about Big Brother bossing them around,” Paige added.  “Fannie Mae and Freddie Mac are government-supported duopolists, and these allegations underscore the dangers posed by such mammoth government ‘corporations.’” 

Federal Reserve Chairman Alan Greenspan has also expressed concerns about the GSEs’ government-enhanced status.  In a letter last year he spoke of their “substantial” benefits and the influence they wield in the financial markets as a result of their size and their implied government guarantee. 

The 300,000-member National Taxpayers Union (NTU), a member of the GSE watchdog group HomeEC, agreed and joined CAGW in expressing concern.  “Whether these allegations about Fannie Mae and Freddie Mac are true or not, regulators and elected officials have a special responsibility to taxpayers to find out,” said Pete Sepp, NTU Vice President for Communications. “The slightest hint that firms supported with tax dollars might be involved in shaking down competitors ought to shake up Congress as well.”

CAGW is a nonpartisan, nonprofit organization with over a million members and supporters, dedicated to eliminating waste, fraud, and abuse in government.