House Financial Services Chairman Jeb Hensarling on Wednesday called for the termination of Fannie Mae's government-sponsored enterprise charter, after the mortgage giant asked for a $3.7 billion loan from the government.
“Today’s announcement that Fannie Mae has once again run out of money to pay its own bills is the latest example of why we need to repeal the GSEs’ government charters once and for all," the Texas Republican said in a statement. "After footing the bill for the costliest bailout in history, taxpayers are sick and tired of getting ripped off by Fannie and Freddie and then scolded by GSE apologists when they complain."
Fannie's request, prompted by accounting losses relating to the new tax law, is to draw on its line of credit at the Treasury, which was created when it was originally bailed out in 2008. Since 2012, all of the company's profits have been sent to the Treasury. Drawing on the Treasury for $3.7 billion doesn't fundamentally affect the financial relationship between Fannie and the government.
Hensarling called for legislation this year to reform the housing finance system.
In 2013, his panel voted to advance legislation that would have shuttered Fannie and Freddie and reformed the secondary market for mortgages. The GSEs buy mortgage loans from the private sector, thus injecting more liquidity into the mortgage market — they can either hold the loans themselves, or bundle them into mortgage-backed securities that can be sold again.
Hensarling also called for Fannie to cease its contributions to affordable housing trust funds. In 2014, Obama-appointed Federal Housing Finance Agency director Mel Watt allowed Fannie Mae and Freddie Mac to begin contributing to the funds, which conservatives have criticized as slush funds for favored groups.
"If the GSEs don’t have the money to pay their own bills, they should not be making optional payments to outside entities," Hensarling said.
The National Low Income Housing Coalition, though, praised Watt for continuing payments to the funds.
“FHFA Director Watt’s decision is an important step forward, and we commend him for it,” said Diane Yentel, the group's president. "Far more [housing trust fund' resources are needed, however," she added.