(WASHINGTON, D.C.) -- Citizens Against Government Waste (CAGW), America's largest taxpayer watchdog group, today lauded Rep. Richard Baker (R-La.) for his work in exploring the risk to taxpayers inherent in the mounting debt held by Government Sponsored Enterprises (GSE) such as Fannie Mae and Freddie Mac.

"Congressman Baker is doing a great service to homeowners and taxpayers in Baton Rouge and around the nation by asking Fannie Mae and Freddie Mac some tough questions about their skyrocketing debt," said CAGW President Thomas Schatz.  "His work will help insure that these organizations stick to their mission of making home mortgages available for middle- and working-class families."

"Unfortunately, Fannie and Freddie are engaging in 'mission creep,' a common malady of government programs and quasi-government enterprises," Schatz continued.  "If they continue their quest to reach into sub-prime and jumbo mortgages, there is a potential danger of collapse on the scale of the savings and loan crisis of the 1980s."

Schatz noted the many similarities between the S&Ls of the 1980s and the current activities of Fannie Mae and Freddie Mac:  They rely on short-term debt to buy long-term mortgages.  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.

Rep. Baker has introduced the Housing Finance Regulatory Improvement Act of 2000 (HR 3703), which would make GSE regulation and oversight more effective.  He has also testified before the full House Banking Committee on the risks of GSE debt.

"Congressman Baker has been getting a lot of flak from Fannie Mae since he started talking about GSE debt.  Most federal bureaucracies, including quasi-government agencies like Fannie Mae, aren't happy to be put in the spotlight of congressional oversight," Schatz said.  "But America is well served when someone like Richard Baker is looking after taxpayers' money."

CAGW is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.