Hensarling Responds to FHFA Dividend Payment Changes

Hensarling Responds to FHFA Dividend Payment Changes

WASHINGTON – (RealEstateRama) — 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:

Financial Services Committee

“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.”

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Financial Services Committee

The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund.

The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.

Contact:

House Financial Services Committee
Democratic Staff
2129 Rayburn House Office Building,
Washington, DC 20515
Phone: (202) 225-4247
Fax: (202) 225-6952 

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