"Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae." -Rep. Maxine Waters (D-CA)
The taxpayers have already lost an astonishing $126.9 billion on Fannie Mae and Freddie Mac. On May 5, 2010, Freddie Mac requested an additional $10.6 billion in bailout funds. On May 10, 2010, Fannie Mae requested an additional $8.4 billion in bailout funds. This brings the total amount of taxpayer funds lost on the two entities to approximately $146 billion. On December 24, 2009, the Department of Treasury's Secretary Tim Geithner approved the removal of Fannie's and Freddie's $400 billion funding caps, essentially turning Fannie and Freddie into government agencies and exposing the taxpayers to all of Fannie's and Freddie's liabilities. According to the Congressional Budget Office, the taxpayers' liabilities are expected to be nearly $400 billion. Yet, the Democrats continue to protect the failed government sponsored enterprises.
On May 11, 2010, Rep. Paul Kanjorski (D-PA), chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, was asked about reforming the bankrupt GSEs to relieve the taxpayers of what will likely be the most expensive taxpayer funded bailout in the nation's history. Chairman Kanjorski stated, "It's too complicated." On May 5, 2010, Politico reported that Rep. Barney Frank (D-MA), longtime protector of Fannie and Freddie and the current chairman of the House Financial Services Committee recently sent a memo to Obama administration officials and Senator Chris Dodd, chairman of the Senate Banking Committee, urging them to oppose efforts to reform Fannie and Freddie during the current financial regulatory reform debate.
While Democrats attempt to hide their heads in the sand, their political allies are draining U.S. taxpayers at a time when the financial security of many Americans is at stake. The current unemployment rate stands at nearly 10 percent, and the national debt is at nearly $14 trillion. House Republicans have offered a plan that protects the taxpayers, is financially responsible and prevents Washington politicians from propping up Fannie Mae and Freddie Mac.
Taxpayer Protection: The Republican financial reform plan, H.R. 3310, would put an end to the taxpayer bailouts for Fannie Mae and Freddie Mac. Fannie and Freddie's current government-subsidized model will cost taxpayers hundreds of billions of dollars. The Republican plan would end the model that allows privatized profits and socialized losses.
Restoring Market Discipline: The plan would sunset the current GSE conservatorship by a date certain and place Fannie and Freddie in receivership if they are not financially viable at that time. If they are viable, the plan would initiate the process of transitioning Fannie and Freddie into fully private entities.
Encourage Innovation and Choices for Consumers: Fannie and Freddie have monopolized mortgage finance and used their government privileges to crowd out competition, stifling innovation. Consumers benefit from competition as a result of innovation and lower costs. The Republican plan would put an end to Fannie's and Freddie's monopoly and force them to compete fairly in the marketplace.