GOP targets mortgage bailouts

November 22, 2010

By Sean Lengell-The Washington Times

Republican leaders on Capitol Hill say ending the federal bailout of insolvent mortgage buyers Fannie Mae and Freddie Mac will be a major goal for the next Congress and criticize Democrats for failing to fix the pair of institutions that had central roles in the recent financial and housing crises.

House Republicans have rebuked Democrats for not including the troubled lenders in the landmark Wall Street reform bill passed by Congress and signed into law by President Obama in July, saying they ignored a central problem that led to the housing market collapse, and are prepared to take up the topic when they take control in of the chamber in January.

“Over the last few years, Americans have seen up close the fallout from policies that encourage overexposure and the reckless overextension of debt,” said Rep. Tom Price of Georgia, chairman of the Republican Study Committee, a group of conservative House Republicans. “By using Fannie Mae and Freddie Mac to manipulate the housing market, Washington created a recipe for economic disaster.”

Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee and presumed incoming chairman, called ending federal assistance to Fannie Mae and Freddie Mac “my top priority.”

Fannie and Freddie are government-sponsored companies that either guarantee or own almost half the nation’s mortgages.

“Using taxpayer money to subsidize the mortgage market is an addiction, and like all addictions it can’t be cured overnight,” he told CNBC this month. “There will be a reasonable transition period over a number of years to allow for the private market to develop.”

Democrats have dismissed Republican accusations that they ignored problems with Fannie Mae and Freddie Mac, saying Republicans did nothing to reform the institutions when they controlled the House from 1995 to 2007. But many Democrats agree the agencies need to be revamped. Outgoing House Financial Services Committee Chairman Barney Frank, Massachusetts Democrat, has said the two institutions should be abolished.

“The only question is: What do you put in their place?” he said.

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