WASHINGTON – House Republican Conference Chairman Jeb Hensarling (R-Texas) today re-introduced legislation to stop taxpayer-funded bailouts of Fannie Mae and Freddie Mac and put these two companies on a path towards privatization. The failures of the two government-sponsored enterprises (GSEs) have directly cost taxpayers more than $150 billion.
“The two largest, most influence-exerting, regulation-avoiding, bailed-out institutions weren’t banks and weren’t located on Wall Street. They were Fannie Mae and Freddie Mac, the mortgage market financial Frankensteins that were created not in a competitive marketplace, but in a government lab in Washington,” Hensarling said. “The GSEs are on track to be the nation’s biggest bailout, more than AIG and GM and all the big banks combined. It’s time to enact fundamental reform of Fannie and Freddie before these companies go from ‘too big to fail’ to ‘too late to fix.’”
Financial Services Committee Chairman Spencer Bachus said, “Reforming Fannie Mae and Freddie Mac is a top priority for the Committee. The bill Vice-Chairman Hensarling has proposed is a fulfillment of the commitment Republicans made when we urged Democrats to include reform in their bill to restructure financial services regulation. Republicans will continue to offer solutions that wind down the operations of Fannie Mae and Freddie Mac in order to protect the taxpayers from another bailout and to reform the entire housing finance system.”
“The very essence of the American dream is to leave your children with more freedom, greater opportunity, and a higher standard of living than you enjoyed. Part of that dream is to own a home,” Hensarling said. “Our goal is to help home-buyers stay home-owners, and free taxpayers of the burden that comes when homes get sold to buyers who simply can’t afford them.”
In February of this year the Administration released a report required by law outlining several options for long-term housing finance reform. One of the options would transition to a very limited role for the taxpayer in housing finance, similar to Hensarling’s proposal.
“It’s my hope that President Obama will work with us to pursue a path that will protect taxpayers, end the billions of dollars in bailouts, and bring certainty back to the mortgage market,” Hensarling concluded.
History of the GSE Bailout Elimination and Taxpayer Protection Act
Hensarling’s GSE reform legislation was originally introduced in 2008. Similar legislation was included in the Republican financial reform legislation, H.R. 3310, the Consumer Protection and Regulatory Enhancement Act. The Hensarling bill was introduced again in March of 2010 and was later offered as an amendment to the Democrats’ financial regulatory reform bill, now known as Dodd-Frank. U.S. Senator John McCain offered an amendment to the financial regulation bill that was modeled after Hensarling’s legislation.
Last Congress, Republican Ranking Member Spencer Bachus repeatedly called on then-Chairman Barney Frank tohold legislative hearings on Hensarling’s GSE legislation, but the Democrats refused.
Additionally, House Republicans included a commitment to end the GSE bailouts by reforming Fannie and Freddie in the Pledge to America.
Summary of the GSE Bailout Elimination and Taxpayer Protection Act