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Fannie and Freddie Reform: What Are We Waiting For?


WASHINGTON, May 11 -

  

The bailout tab for Fannie and Freddie reached $145 billion this week and scrutiny of the taxpayer funded GSE's reaches a new high. And what do the Senate Democrats do to address the billions of taxpayer dollars lost? They promise to study the issue some more. Meanwhile, Senator McCain should be commended for offering an amendment that protects the American taxpayer from future bailouts. His amendment mirrored House Republicans call for reform by offering a real plan to protect taxpayers and end the unlimited bailout of the GSEs. The American people need real reform that addresses the cause of the crisis, not another government study that punts the problem to next year.

*UPDATED TIMELINE...SCROLL DOWN FOR MOST RECENT DISAPPOINTMENTS*

February 19, 2009...

Within weeks of taking office, the Obama Administration increases the amount of Fannie and Freddie's bailout from $200 billion to $400 billion.

March 22, 2009...

Appearing on CNN's "State of the Union with John King" Christina Romer states "I think that [Fannie and Freddie] is certainly going to be an issue going forward. I think it should be part of the overall financial regulatory reform, to figure out what is the best way."

June 9, 2009...

While testifying before the Senate, Treasury Secretary Tim Geithner states "The future of the GSEs, including Fannie and Freddie, will be an important -- is an important challenge for us. But we are not going to -- I'm violating my rule of getting ahead of the president. We are not going to recommend in our initial proposals for reform precisely what we think the future of this should be. We're going to begin a process of consulting with the Congress and a broad section of housing experts on what we think the range of options are....But we're going to defer recommendations on those things for a bit longer."

June 17, 2009...

The Administration releases its white paper on financial regulatory reform which includes a paragraph about the future of the GSEs.  The white paper states, "Treasury and the Department of Housing and Urban Development, in consultation with other government agencies, will engage in a wide-ranging initiative to develop recommendations on the future of Fannie Mae and Freddie Mac, and the Federal Home Loan Bank system. We need to maintain the continued stability and strength of the GSEs during these difficult financial times. We will report to the Congress and the American public at the time of the President's 2011 Budget release."

June 18, 2009...

Treasury Secretary Geithner tells the Senate Banking Committee: "I think this is a very important issue, and you're making a -- you're asking a very good question. It is a very different challenge. Our challenge with Fannie and Freddie now -- and this is true about the government's role in the housing market more generally -- is more a challenge for exit, what the future should be. We have to fundamentally rethink what the appropriate role of the government is in the future. We did not get that right. It was not a tenable balance we struck in that situation."

July 10, 2009...
Secretary Geithner is asked during a joint hearing why the Administration's reform proposal does not address Fannie and Freddie. Geithner response: "It is absolutely true that those institutions, over time, took an enormous risk because of the implicit commitment of the government to back them....Now, we are going to have to come to the Congress and propose how to deal with the future of those entities, but now is not the time to do that. And we are going to try and do that carefully and well. But we agree with you that that's something we're going to have to confront together and we will come to you, and it's our responsibility to do that, with our best judgment about what to do. But we'll look at a range of options and we'll work through that together."

August 6, 2009...

During a news briefing, White House Press Secretary Robert Gibbs is asked about a timetable for GSE reform. Gibbs said, "As part of financial regulatory reform, GSE reform is going to be part of that. ...I don't have a specific timetable....Again, I know its certainly part of broader financial regulatory reform. And, obviously, both play an important role in the president's home loan modification program and overall housing policy."

October 29, 2009...

Treasury Geithner is asked about a timetable for GSE reform while testifying before the Financial Services Committee. Geithner response is: "What we have said is that we believe early in the year we're going to outline at least our initial ideas on options for how we do that."

November 6, 2009...

Treasury blocks Fannie Mae from selling $2.6 billion in Low-Income Housing Tax Credits after determining it would be too costly to taxpayers.

December 11, 2009...

The House approves the Democrats' legislation for financial regulation that fails to address Fannie and Freddie.

December 24, 2009...

The Obama Administration again increases the bailout of Fannie and Freddie; this time to an unlimited amount.  As part of this extended bailout, the Administration also relaxes the limitations on the GSEs' portfolios.  Administration officials tell reporters that a plan for Fannie and Freddie will be included in the President's budget for 2011.

December 24, 2009...

Treasury gives top executives at Fannie and Freddie multi-million compensation packages... payable in cash. 

January 21, 2010...

Austan Goolsbee joins the press briefing and has the following exchange with a reporter: QUESTION: What about Fannie and Freddie? I mean, correct me if I'm wrong, but I haven't heard the president mention them in any of these discussions of his financial proposals. I mean, why is that? Were they -- do you guys not think they were part of the problem, or...

GOOLSBEE: No, I don't think it