Johanns, Banking Committee Senators Introduce Bipartisan Legislation to Protect Taxpayers, Reform Broken Housing Finance System
Bill Protects Taxpayers, Winds Down Fannie Mae & Freddie Mac, Preserves Mortgage Market Liquidity
WASHINGTON, DC – June 26, 2013 – (RealEstateRama) — U.S. Sens. Mike Johanns (R-Neb.), Bob Corker (R-Tenn.), Mark Warner (D-Va.), Jon Tester (D-Mont.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.) and Kay Hagan (D-N.C.), all members of the Senate Banking, Housing and Urban Affairs Committee, today introduced legislation to strengthen America’s housing finance system by replacing government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac with a privately capitalized system that preserves market liquidity and protects taxpayers from future economic downturns.
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“We owe it to American taxpayers to listen to the lessons of history and work to prevent massive bailouts at their expense,” Johanns said. “With nearly 90 percent of home loans backed by government guarantees, we need a better model that takes taxpayers off the hook for future bailouts if we ever have a repeat of the 2008 housing crisis. This bill fully pays back taxpayers for the last bailout, and ends the risk of another one in the future.
“Our community bankers and credit unions, who truly are the lifeblood of our small towns, must have equal access to the secondary mortgage market. This bill ensures multiple access points to the secondary market so lenders in places like York, Neb., can issue 30-year mortgages just as easily as those in New York City.”
In 2008, Fannie Mae and Freddie Mac were taken into government conservatorship and given a $188 billion capital injection from taxpayers to stay afloat. As a result of this bailout, the private market has almost completely disappeared, and so nearly every mortgage loan made in America today comes with a full government guarantee. Despite this unsustainable situation, there has still been no real reform to our housing finance system since the financial crisis.
