MEDIA ADVISORY: TAXPAYER WATCHDOG GROUP TO GIVE HILL TESTIMONY ON FANNIE MAE, FREDDIE MAC | Citizens Against Government Waste

MEDIA ADVISORY: TAXPAYER WATCHDOG GROUP TO GIVE HILL TESTIMONY ON FANNIE MAE, FREDDIE MAC

Press Release



For Immediate ReleaseContact: Jim Campi or Aaron Taylor
June 20, 2000(202) 467-5300

 


(Washington, D.C.) –Citizens Against Government Waste (CAGW) President Thomas Schatz will testify before the House Subcommittee on Capital Markets, Securities, and Government Sponsored Enterprises.  The hearing will take place on Wednesday, June 21 at 10:00 am in 2128 Rayburn House Office Building.  Mr. Schatz will discuss the costs and risks to taxpayers inherent in the activities of government sponsored enterprises, specifically Fannie Mae and Freddie Mac.  Following are excerpts from Mr. Schatz's prepared testimony:


"CAGW was created 16 years ago after Peter Grace presented to President Ronald Reagan 2,478 findings and recommendations of the Grace Commission…  The Grace Commission summed up why it is important for Congress to convene hearings such as these and to continue oversight of the GSEs.  'The Government does not control agency growth because it is private; but the agencies depend upon Federal sponsorship (i.e., being treated as part of the Government) for their growth.  This contradiction has extremely important consequences, now and for the future.'  Remember that this was in 1984...


"The activities of Fannie Mae and Freddie Mac do not exist in a vacuum.  Their duty to shareholders requires that they maximize profits.  Yet, since there is also a duty to the taxpayers that runs with their special status, one mission necessarily comes into conflict with the other.  There are strong indications that the GSEs' activities in recent years have begun to stray from their chartered mission, that their primary motivation has become the pursuit of high profits, and that this is driving them into increasingly risky financial practices…


"[A proposed "stress test" regulation] designed to certify the financial safety and soundness of the GSEs, has not in fact gone into effect, though it is in its final stages...  Fannie Mae in particular has consistently resisted submitting to the stress test.  It is strange indeed to now see Fannie Mae extolling the virtues of a regulation that they have consistently argued against and which has never actually been applied."


Mr. Schatz's complete prepared testimony will be available the morning of June 15 on CAGW's website, www.cagw.org.  CAGW is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.

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