(Alexandria, VA) -- Amidst House and Senate hearings on the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac, a grassroots coalition of 37 federal, state, and local groups -- representing millions of Americans -- is warning Members of Congress that if they don't act now to pass reforms it may soon be too late. The 350,000-member National Taxpayers Union (NTU) helped organize the joint-statement, which has been sent to lawmakers on Capitol Hill.
"The past year has offered story after story of financial mismanagement and accounting scandals at the two government-backed lending giants," the signatories noted. "Of even greater concern to taxpayers, however, is the potential cost if either of these entities faces bankruptcy or default."
This concern is reflected in the breadth of the coalition NTU assembled in support of the statement. In addition to national organizations -- such as Competitive Enterprise Institute, Consumer Alert, and Council for Citizens Against Government Waste -- citizen, consumer, and policy groups from 19 states jumped to join the reform effort. Signatories hailed from Arizona, Arkansas, California, Illinois, Iowa, Minnesota, New York, Pennsylvania, Tennessee, and Virginia, to name a few.
Although the letter recommended that tighter government oversight of Fannie Mae and Freddie Mac "would be a good start ... the best answer to ending the threat to taxpayers is complete privatization of these two entities." One plan the signatories noted to accomplish this end -- and preserve lower interest rates at the same time -- has been developed by financial industry experts Peter Wallison, Tom Stanton, and Bert Ely for the American Enterprise Institute.
"In the 1980s, some of us warned about potential problems with America's Savings & Loans, ... but [m]any Members of Congress chose to simply ignore the situation," the letter concluded. "The history books will record that their lack of leadership ... ended up costing Americans hundreds of billions of dollars. ... We urge the 109th Congress to act decisively to avert another financial disaster and we all look forward to working with you in this endeavor."
For more than a decade, NTU has supported privatization and other reforms of GSEs. Most recently, on December 16, the group sponsored a well-attended briefing session on Capitol Hill, which was broadcast on C-SPAN, exploring reform options for Fannie Mae and Freddie Mac in the 109th Congress.
"Fannie Mae and Freddie Mac often tout their benefits to average homeowners, but this statement proves that Americans in communities across the country are concerned about the liabilities these Government-Sponsored Enterprises have amassed," NTU President John Berthoud observed. "When so many voices have said it's time to cut the taxpayers' ties to Fannie Mae and Freddie Mac, Congress should not only listen but act."
NTU is a non-profit, non-partisan citizen group founded in 1969 to work for lower taxes, smaller government, and more accountability from elected officials. Note: The text of the joint letter, a list of signatories, and other materials on GSE reform are available online at: www.ntu.org.