NTU President Pete Sepp issued the following statement on the Taxpayer’s Stake in Housing Finance Hearing:
As the Senate Banking Committee conveyed a hearing today on "Housing Finance Reform: Maintaining Access for Small Lenders," the nonpartisan National Taxpayers Union (NTU) urged lawmakers to bear in mind one vital constituent who is not among the witnesses: the American taxpayer. NTU President Pete Sepp offered the following comments:
"Today's hearing has to do with a narrow aspect of the housing finance system, but as with other hearings in this area of policy, one question overshadows it all: how will the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac operate in a financially responsible manner without burdening taxpayers?
Beginning with testimony in 1989, followed by extensive additional testimony in 2000, and on numerous other occasions since then, National Taxpayers Union has consistently warned public officials about the risks posed by the undercapitalization of housing GSEs. And almost as consistently, too many of those public officials have attempted to downplay these fiscal dangers to taxpayers.
We commend Secretary Mnuchin’s statements earlier this year making the soundness of GSEs a top priority, particularly focusing on safeguarding taxpayers. FHFA Director Mel Watt has recently testified that Fannie Mae and Freddie Mac may soon face a capital crisis. It’s time for leaders on both ends of Pennsylvania Avenue to listen to Fannie and Freddie’s regulator.
There are several approaches to resolving these issues, including legislation being developed in both chambers. Some are harmful, others helpful. One non-legislative initiative, the Moelis proposal introduced last month, would build robust capital at Fannie and Freddie to immediately begin replacing the taxpayer backstop.
As policymakers debate their next moves, they should remember that the clock is ticking on some more immediate decisions. Whatever the future of these entities may be, allowing new capital to better back up Fannie and Freddie in the near term, rather than another government bailout, is genuine taxpayer protection while longer term reforms are put into place."