On The Ropes: Committee Democrats Forced to Respond to Bachus Op-Ed in Politicoâ€¦.
WASHINGTON, Apr 28 -
April 28, 2010
But We Have Quotes, Too
In the Chairman’s own words, Fannie and Freddie exist to fund subsidized housing -- “I do not want Fannie and Freddie to be just another bank. If they were not going to do more than another bank would because they have so many advantages, then we do not need them. And so therefore, I do think I do not want the same kind of focus on safety and soundness that we have in OCC and OTS. I want to roll the dice a little bit more in this situation towards subsidized housing.” (House Financial Services Committee hearing, Sept. 25, 2003)
During the same hearing, Frank said “Essentially, there are people in the country who are prepared to lend money to Fannie Mae and Freddie Mac at less interest rates than they might get elsewhere. I thank those people for doing that. I must tell them that I hope they are not doing that on the assumption that if things go bad, I or my colleagues will bail them out. We will not.”
Chairman Frank has also described government takeover of Fannie and Freddie as “a kind of reassurance to people that help will be there [for the GSEs], even though we don’t think it will be needed,” and ventured that “there’s a better than 50 percent chance that the cost [of the new government backstop] will be zero.”
The Unlimited Bailout of Fannie/Freddie Occurred on Democrats’ Watch
Chairman Frank got his subsidized housing, alright…and the government backstop has turned into a huge taxpayer liability that’s become the biggest bailout of them all. Now more than 90 percent of housing finance is controlled by the government, and taxpayers have contributed more than $127 billion to Fannie and Freddie, with close to$400 billion total and $5 trillion in guarantees.
It’s a shame that Congressional Democrats are still fighting the Bush Administration when it’s the Obama Administration who gave the housing giants an unlimited bailout, without so much as a plan to wean them off taxpayer funding.
For a timeline of Democrats’ inaction on Fannie and Freddie since the bailout click here.
To view the House Republican financial reform plan click here.
For the House Republican principles for GSE reform, click here.