No “Blank Check” Taxpayer Bailout for Fannie Mae, Freddie Mac

FreedomWorks announced its opposition today to Treasury Secretary Henry Paulson’s unlimited “Blank Check Bailout” of Fannie Mae and Freddie Mac, and called on the Secretary to present a plan that permanently restructures these failed institutions.

Secretary Paulson told Congress in testimony last September that:

“If we knew then what we know now, we likely would not have designed entities like the GSEs that have private ownership but are required to undertake a public mission. These competing interests are too difficult to manage, and the potential long-term market distortions and public policy concerns are too significant. “

FreedomWorks President Matt Kibbe commented:

“We have an opportunity at this moment to permanently fix the GSE threat to our financial system. Yet the proposal before Congress simply doubles down its bet on these risky institutions and puts taxpayers explicitly on the hook. The bill actually includes a new tax on GSE revenues as well as a reckless expansion of their conforming loan limits.

“We call on Secretary Paulson to rise up to this challenge and present a plan that truly restructures the GSEs instead of undermining them further and creating unlimited taxpayer liability.

“There is more than $5 trillion in outstanding GSE debt. Creating an explicit government guarantee for Fannie Mae and Freddie Mac could end up costing taxpayers $1 trillion, according to an analysis by Standard & Poor’s.

“Given the magnitude of these issues, why is Congress rushing to complete this legislation? There is time to fully examine this proposal and make certain that taxpayers’ exposure is limited and that the GSEs are put on a path to full privatization.”