After drawing more than $150 billion in taxpayer funds, government-controlled Fannie Mae and Freddie Mac may soon have to find a different source of funding if Republican congressmen get their way[1]. Senators John McCain (R-AZ) and Orrin Hatch (R-UT) introduced legislation yesterday that would permanently end federal support for the GSEs. The bill, called the GSE Bailout Elimination and Taxpayer Protection Act is the Senate companion to similar House legislation (HR 1182) introduced by Spencer Bachus (R-AL) and Jeb Hensarling (R-TX). The bill is intended to end the GSE’s federal conservatorship within two years and accelerate the timeline for privatization. The bill not only repeals Fannie and Freddie’s affordable housing goals mandate, but will cap maximum portfolio size at $700 billion and reduce that cap over five years to $250 billion.
Critics of the move say that eliminating these two entities so quickly could destabilize the “fragile housing market,” but McCain disagrees, saying that “the events of the last three years have made it clear that never again can we allow the taxpayer to be responsible for poorly managed financial entities who gamble away billions of dollars”[2]. Many republicans are facing tough opposition to their support of this bill from members of the real estate industry such as the National Association of Realtors (NAR), which wants to keep Fannie and Freddie operating – just under tighter regulations – in order to prevent rising interest rates and another lending crunch. Do you think that it’s time for Fannie and Freddie to go?
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[1] http://www.dsnews.com/articles/senators-introduce-bill-to-end-taxpayer-support-of-gses-2011-04-04
[2] http://washingtonexaminer.com/politics/congress/2011/04/gop-moves-eliminate-fannie-freddie
I would love to see this bill pass. It’s about time, too. I agree completely with, “the events of the last three years have made it clear that never again can we allow the taxpayer to be responsible for poorly managed financial entities who gamble away billions of dollars.” The sad part is not only it is the last three years but this has happened time and time again through America’s history yet we never seem to learn!
If I was John Mcain & Orin Hatch I also would attempt to gain control of “Legal Thievery” indirectly, through guise of new reform.
I say tighten the the regulations on Fannie & Freddie and keep them until the housing market fully stabelizes.
YES!! It is well past time for Fannie and Freddy to go! Eliminate the subsidies. By the way I am a real estate agent that believes a free market would be better for all.
Not to eliminate the 2 entities altogether, but rather reduced the amount of
subsidies, have better control and management.
I worked as a loan officer at a large Savings and Loan in the late eighties and early nineties. I was there during the ” S&L crisis”, and the regulations were put into place so that this financial meltdown will never happen againg, and here we are less than 20 years later, and they are singing the same song! The bigger isue, is the rapid growth of the secondary market, and how Fannie and Freddie became dominate in the secondary market. In the eighties, the Savings and loan Industry were the banks that were making the majority of the loans on Single Family residences. Of course, the S&L’S have gone away, and before they did Fannie and freddie took over, and as they say, the rest is history.
I think FNMA & FREDDIE should be privatized and not subsidized by taxpayers. They have had a free ride so to speak or a 24 hour atm at their will with no accountability or responsability with regards to how they oversaw the whole process. Guidelines were written but many were broken or overlooked. With that said I hope there is a solution to all of this as it would hurt future homebuyers.
I am a Realtor and I see first hand the continued waste of taxpayer dollars as Fannie and Freddie atttempt to dispose of the enormous amount of inventory. They spend way too much money on each foreclosure they dispose of. It is absolutely insane that the reins haven’t been pulled tighter on them as far as their spending on each distressed property.
They need to go over the next few years, for sure.