Fannie Mae-No Politics (FNMA)

[Daveknowsnothing]

No more voting for John Cornyn. This is the email I received back.



Dear Mr. Compton:

Thank you for contacting me regarding Fannie Mae and Freddie Mac. I appreciate having the benefit of your comments on this matter.

Fannie and Freddie are America’s two largest mortgage-finance companies, and their activities played a large role in causing the recent housing bubble and subsequent financial crisis. Prior to September 2008, they were “government-sponsored enterprises” (GSEs). Since then, they have been in federal conservatorship and have effectively become government entities.

During the 113th Congress, the Senate Committee on Banking, Housing and Urban Affairs approved the Housing Finance Reform and Taxpayer Protection Act (S. 1217). Among other things, S. 1217 would have replaced Fannie Mae and Freddie Mac with a new government entity called the Federal Mortgage Insurance Corporation (FMIC). FMIC would act as a new federal regulator of the mortgage industry, designed to monitor the safety and soundness of various financial institutions. In addition, S. 1217 would have created a new grant program called the New Market Access Fund, as well as expanded both the base and the rate for the national Housing Trust Fund and the Capital Magnet Fund. Proponents argued that the proposal would have shifted more of the risks of mortgage lending to the private sector. Therefore, the federal government would have only served as a final backstop in the secondary market for mortgage-backed securities, helping to maintain the 30-year fixed mortgage. S. 1217 was not enacted prior to the adjournment of the 113th Congress.

I have long advocated reforming both Fannie and Freddie to protect taxpayer interests. In 2006, after we learned that Fannie had intentionally overstated its earnings by $10.6 billion, I urged the Senate Majority Leader to bring reform legislation before the full Senate that would have subjected GSEs to stricter oversight and regulations. Regrettably, the Senate did not consider these reforms.

Congress must reform GSEs to make sure that taxpayers’ money is not used to bail out those who made bad investment decisions. Unfortunately, according to the Congressional Budget Office, the mortgage guarantees that GSEs are expected to issue from 2015 through 2023 will cost federal taxpayers almost $20 billion. You may be certain that, as a member of the Senate Finance Committee, I will continue to advocate for the reform of Fannie Mae and Freddie Mac to protect taxpayers.

I am honored to represent Texas in the United States Senate. Thank you for taking the time to contact me.

Sincerely,

JOHN CORNYN
United States Senator





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