Republicans Call For Plan To Protect Taxpayers From Fannie and Freddie Losses

Congressional Republicans are calling for a public hearing to discuss the Obama Administration’s plan for Fannie Mae and Freddie Mac. Citing Fannie Mae and Freddie Mac’s expensive status …

Congressional Republicans are calling for a public hearing to discuss the Obama Administration’s plan for Fannie Mae and Freddie Mac. Citing Fannie Mae and Freddie Mac’s expensive status as government sponsored enterprises, Congressional Republicans have been critical of the lack of an official plan from the White House for the companies. See the following article from HousingWire for more on this.

House Republicans are calling for a Congressional hearing on the Obama Administration plan for the government-sponsored enterprises (GSEs) Fannie Mae (FNM: 1.01 +2.02%) and Freddie Mac (FRE: 1.20 +3.45%).

In a letter to Rep. Edolphus Towns, (D-NY), chair of the House Oversight and Government Reform Committee, and Dennis Kucinich, (D-Ohio), chair of the Domestic Policy subcommittee, Rep. Darrell Issa (R-Calif.) and Jim Jordan (R-Ohio) justify the request by accusing the Obama Administration of refusing to develop a plan for the future of the GSEs. Issa is the ranking member of the Oversight and Government Reform committee and Jordan is a ranking member of the Domestic Policy subcommittee.

“The taxpayer bailout of Fannie Mae and Freddie Mac will almost certainly be the most expensive of the financial crisis,” the Republicans wrote. “The American people have a right to know what the Administration’s goals concerning Fannie and Freddie really are and what plans it has in place to meet those goals.”

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“A public hearing is a necessary step in continuing the Committee’s oversight of government involvement in the financial sector,” they added.

The Congressmen allege the timing of the Christmas Eve announcement, which proclaimed that the Fannie and Freddie government funding cap would be lifted for three years was “perhaps scheduled in an attempt to minimize public scrutiny,” and note the current time line of creating a plan by 2011 falls “conveniently after the mid-term congressional elections.”

“Treasury [Department] secretary Timothy Geithner’s announcement last week that the Administration will not produce a plan to protect taxpayers from mounting losses at these failed companies until 2011 not only constitutes a broken promise to develop a plan this year but also shows that the Administration still does not appreciate the urgency of addressing this critical issue.”

The letter also alleges the multi-million-dollar cash compensation packages GSE executives received are not in line with the compensation heads of federal departments receive or that of other public financial institutions, despite being signed off on by Kenneth Feinberg, the Obama Administration’s “pay czar.”

“Now that Fannie and Freddie are wards of the government, it seems appropriate to ask whether taxpayers are getting good value for their money when executives who are effectively public employees receive such lucrative salaries courtesy of the taxpayers,” the letter said.

A House Financial Services Committee hearing to consider the future of the GSEs was scheduled for March 2 and Geithner, along with Department of Housing and Urban Development (HUD) secretary Shaun Donovan were slated to testify, but a committee spokesperson told HousingWire that the hearing has since been postponed, and a new date has not been set.

This article has been republished from HousingWire. You can also view this article at
HousingWire, a mortgage and real estate news site.


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