Republicans release second wave of GSE reform bills
Republicans in the House of Representatives unveiled seven more bills Friday to reform the government-sponsored enterprises for a total of 15 since March. Rep. Scott Garrett (R-N.J.) is chairman of the GSE subcommittee and leads the GOP effort to wind down Fannie Mae and Freddie Mac. He said Friday the second round of new bills continues the work of ending bailouts for these companies and ushering private capital into the mortgage market. Republicans introduced eight bills at the end of March. "We can no longer afford to sit back and allow the ongoing bailout of these failed institutions to continue," Garrett said. "While special interest groups and the guardians of the status quo may not want to admit it, Fannie and Freddie’s days are numbered. It’s not a matter of if, but when – the quicker we begin the process of dismantling them the better off we’ll be." Two other House lawmakers introduced a bipartisan GSE reform bill this week that would wind-down Fannie and Freddie over five years and provide a government backstop for securities issued by five replacement companies funded by private dollars. A spokesman for Rep. Don Manzullo (R-Ill.) said the latest Republican bills are "discussion drafts" and have not been formerly introduced. Manzullo sponsored a bill to prevent the Treasury from lowering the 10% dividend payment Fannie and Freddie are required to make. Both companies have so far pulled $164 billion from the Treasury since entering conservatorship in 2008. Rep. Jason Chaffetz (R-Utah) sponsored another bill that would subject Fannie and Freddie to Freedom of Information Act requests. Because the GSEs were originally chartered by the federal government, they were not part of the federal government, and were exempt from FOIA. Now that they're in conservatorship, Chaffetz maintains they are now part of the government. Rep. Robert Hurt (R-Va.) will propose a bill requiring Fannie and Freddie to dispose of all "nonmission critical assets," which includes patents and data. Rep. Michael Fitzpatrick (R-Pa.) sponsored a bill setting a total dollar cap on the amount of money to be used in the Fannie and Freddie bailout. "American taxpayers have already spent too much on Fannie and Freddie,” said Fitzpatrick. "While stability needs to be maintained at these organizations, they must also be put on clear notice that they cannot continue to charge their bad investment decisions on our national credit card." Rep. Steve Stivers (R-Ohio) will propose a bill ensuring that replicas of the GSEs would not be created to replace Fannie and Freddie in the future housing finance system. The bill amends a section in the Housing and Economic Recovery Act that allows a new company to be created if either GSE goes into receivership. Rep. Randy Neugebauer (R-Texas) sponsored a bill to prohibit taxpayers from funding legal fees for former Fannie and Freddie employees. Neugebauer led an investigation into what executives were charging the GSEs to cover legal expenses after the crisis. Roughly $162 million has been spent defending Fannie, Freddie and former executives there in a variety of lawsuits. Rep. Ed Royce (R-Calif.) will propose a bill that would abolish the Affordable Housing Trust Fund, which provides resources throughout the country to affordable housing to low- to middle-income families. "Building on the momentum and success of the first round of bills, we are introducing these seven bills to continue with our efforts to end the bailout, protect taxpayers and get private capital off the sidelines," Garrett said. "These seven bills were carefully designed to tie the hands of Fannie and Freddie so that they are no longer a drag on the American taxpayers, a threat to our economic security, and an impediment to private market growth and development." Write to Jon Prior. Follow him on Twitter @JonAPrior.