Stop propping up Fannie and Freddie

May 13, 2010

The government’s massively expensive take-over of mortgage finance agencies Fannie Mae and Freddie Mac will soon get more expensive.  Fannie and Freddie, both government-sponsored entities, were taken under the control of the Treasury Department during the financial crisis in the fall of 2008.

“Fannie Mae has again asked taxpayers for more money after reporting a first-quarter loss of more than $13 billion. The mortgage finance company, which was rescued by the government in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses.”

“The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae’s total to $83.6 billion. The total bill for the duo will now be nearly $145 billion.”

At a Senate Finance Committee meeting on Tuesday, the Committee tried, to no avail, to get a sense for how much money the taxpayers would be responsible.

“‘The actual cost I do not know,’ Federal Housing Finance Agency Acting Director Edward DeMarco said…”

There simply isn’t enough political will in Congress to tackle this problem. Yesterday, Senators John McCain (Ariz.), Richard C. Shelby (Ala.) and Judd Gregg (N.H.) made a failed attempt to include an amendment in the financial regulatory reform legislation to wind down Fannie and Freddie.

The agencies have become a prime example of government waste and inefficiency.  It’s past time to stop propping up these failing institutions with Americans’ hard-earned dollars.

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