Patrick McHenryChairman

Washington, December 21, 2017 -

This morning, the Federal Housing Finance Agency (FHFA) and the Treasury Department announced an agreement to deprive taxpayers of the compensation to which they are legally entitled under the ongoing conservatorships of Fannie Mae and Freddie Mac (the GSEs).  This agreement alters the practice that has been in place for more than half a decade to determine how to compensate taxpayers for the risk of their continued financial backing of these failed mortgage companies.  Under today’s agreement, the GSEs increase the allowable amount of net capital they can hold in 2018 and beyond from zero dollars to $3 billion each – revenue that should be going to taxpayers – meaning the ongoing cost of the conservatorship will increase to $119.1 billion for Fannie Mae and $74.3 billion for Freddie Mac.  In response, House Financial Services Committee Chairman Jeb Hensarling (R-TX) issued the following statement:

“I’m very disappointed at FHFA and Treasury’s decision to roll back these vital taxpayer protections.  There is simply no good reason, policy or otherwise, why we should be putting the GSEs’ balance sheets ahead of the interest of taxpayers.  In fact, the Congressional Budget Office evaluated this issue last year and said that such a change not only converts a potential draw on federal funds into an immediate draw, but increases ‘the explicit federal backstop for the GSEs—and thus the risk to taxpayers.’  Taxpayers remain explicitly on the hook for more than $250 billion of future GSE loses, and literally trillions more in implicit GSE backing.  Americans deserve better, and we need to reform our broken financing system now, not tomorrow, not next Congress, not next crisis.  Now.”