TAXPAYER WATCHDOG GROUP URGES GREATER OVERSIGHT OF FANNIE MAE AND FREDDIE MAC | Citizens Against Government Waste

TAXPAYER WATCHDOG GROUP URGES GREATER OVERSIGHT OF FANNIE MAE AND FREDDIE MAC

Press Release

For Immediate ReleaseContact:  Jim Campi or Aaron Taylor
March 24, 2000(202) 467-5300

 

In a letter to Congress, the Council for Citizens Against Government Waste draws

attention to candid testimony of Treasury Undersecretary Gensler

 

(Washington, D.C.) – In a letter today to members of the House of Representatives, the Council for Citizens Against Government Waste (CCAGW) urged Congress to take a closer look at the nation’s two largest government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac.

“Congress needs to examine the activities of Fannie Mae and Freddie Mac,” remarked CCAGW President Thomas A. Schatz.  “The increasing debt of Fannie Mae and Freddie Mac, combined with their willingness to accept riskier mortgages, could leave taxpayers sitting on another S&L time bomb.”

Housing GSE debt has skyrocketed during the past few years, increasing by more than $260 billion in 1999 alone to $2.2 trillion.  As housing GSEs flood the debt market, they compete directly with U.S. government-backed securities – driving up interest rates the U.S. Treasury must pay to service its guaranteed debt.  In fact, the housing GSEs have publicly stated that they want to replace Treasury debt as the nation’s benchmark note.

“Fannie Mae and Freddie Mac portray themselves as private institutions when it suits their needs, but imply that they are government-backed to potential investors,” Schatz noted.  “They cannot have it both ways.”

On Wednesday, Treasury Undersecretary Gary Gensler told a House banking subcommittee that “repeal of the [$ 2.25 billion] credit line of credit [with the Treasury that Fannie Mae and Freddie Mac enjoy] would be consistent with the congressional requirement that all GSE securities carry a disclaimer that they are not an obligation of the U.S. government.”  Fannie Mae lamely referred to these comments as “irresponsible.”  Schatz called them “encouraging and refreshing.”

CCAGW is the lobbying arm of Citizens Against Government Waste, a nonpartisan organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.  CCAGW is a member of HomeEC, a coalition of taxpayer groups who want greater accountability of GSEs.

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