CAGW CASTIGATES FANNIE MAE AND FREDDIE MAC FOR POCKETING HUGE TAXPAYER SUBSIDIES | Citizens Against Government Waste

CAGW CASTIGATES FANNIE MAE AND FREDDIE MAC FOR POCKETING HUGE TAXPAYER SUBSIDIES

Press Release

For Immediate ReleaseContact:  Sean Rushton or Melissa Naudin
May 23, 2001(202) 467-5300

 

Washington, D.C. – Citizens Against Government Waste (CAGW), the nation’s largest taxpayer advocacy group, today reacted to a Congressional Budget Office (CBO) report that found that implied subsidies to the nation’s two mortgage giants, Fannie Mae and Freddie Mac, has exploded by 74 percent since 1995, and that 37 percent of the subsidies never make it to potential homeowners, but are pocketed by Fannie Mae and Freddie Mac stockholders.  The value of the subsidies to the two government-sponsored enterprises (GSE), is more than $10.6 billion annually.     

“This analysis confirms that Fannie Mae and Freddie Mac have aggressively leveraged their their government charters, and the huge windfall that comes with them, to accrue monumental amounts of debt, reap above-market rates of return, invade and undercut other financial services sectors, all the while shifting the risk to taxpayers,” CAGW President Tom Schatz said.  “Congress and President Bush must turn their attention to this problem before the taxpayers are bailing out another ‘too-big-to-fail’ financial institution.”

“Fannie Mae and Freddie Mac have a sweet financial deal and that their huge profits are a direct result of the perception by investors that the government backs their securities.  Congress has a fiduciary responsibility to watch out for taxpayers’ interests.  We don’t want a repeat of the S & L bailout.  This CBO study gives taxpayers and their repersentatives in Congress a rare but valuable glimpse at the dealings of these housing giants,” Schatz also said.  “We applaud Chairman Baker for persisting in getting this information out and continuing to work for taxpayers, “ Schatz concluded.  “The idea of supporting truly needy families on the cusp of homeownerhsip is a laudable one, but funneling that support through a massive bureaucracy that keeps more than a third of the subsidy as profit is inefficient, rapacious, and wasteful.  Certainly this is not what Congress had in mind when it created these institutions.”      

CAGW is a member of the HomeEC coalition, an ad hoc coalition of taxpayer and consumer groups committed to drawing much-needed attention to the escalating debt load of the housing GSEs, the absence of either true market discipline or meaningful regulatory oversight of their activities, and the mounting risk these activities pose to taxpayers and to the entire banking system.  Other members of HomeEC include the National Taxpayers Union, Competitive Enterprise Institute, 60 Plus, and the Free Congress Foundation.

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

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