TAXPAYER GROUPS RAISE QUESTIONS ABOUT FANNIE MAE & FREDDIE MAC; ANNOUNCE HomeEC COALITION | Citizens Against Government Waste

TAXPAYER GROUPS RAISE QUESTIONS ABOUT FANNIE MAE & FREDDIE MAC; ANNOUNCE HomeEC COALITION

Press Release

For Immediate ReleaseContact:  Jim Campi or Aaron Taylor
March 9, 2000(202) 467-5300

 

(Washington, D.C.) – The Council for Citizens Against Government Waste (CCAGW) today announced a coalition of taxpayer groups that will raise questions about the activities and regulation of the nation’s two largest government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac.

CCAGW President Thomas Schatz joined Rep. Richard H. Baker (R-La.) of the House Banking Committee at a Capitol Hill news conference to announce the coalition.  Baker's bill, the Housing Finance Regulatory Improvement Act of 2000 (HR 3703), would institute important steps toward making GSE regulation and oversight more effective.

“Fannie Mae and Freddie Mac serve an important function in our economy,” said Schatz.  “The purpose of this coalition is to make sure that they continue making home mortgages available for middle- and working-class families.  Unfortunately, Fannie and Freddie are experiencing 'mission creep,' a common malady of government programs and quasi-government enterprises.”

“Our worry is that GSEs could become the savings and loans of the coming decade, with taxpayers getting the bill for a bailout that will make the S&L crisis look like chump change.”  Citing a report from the American Enterprise Institute, Schatz continued, "If Freddie and Fannie continue their attempts to expand their reach into subprime and jumbo mortgages, there is a real danger of collapse.”

Schatz noted the many similarities between the S&Ls of the 1980s and the current state of Fannie Mae and Freddie Mac:  They rely on home mortages as their predominant investment.  They borrow at government-subsidized rates, shielding them from marketplace competition that enforces sound business practices.  Like the S&Ls of the 80s, GSEs are dramatically increasing their debt.  GSEs are considered by the market to be “too big to fail,” with an implicit government guarantee of their solvency.  “Now is the time to avert this crisis, before history repeats itself,” Schatz concluded.

Other members of the Homeowners’ Education Coalition (HomeEC) are:  the 60+ Association, Citizens for a Sound Economy, the National Taxpayers Union, the Small Business Survival Committee, the Competitive Enterprise Institute, and Capitol Watch.

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

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