Congressman
Henry E. Brown, Jr.

As our country faces historic economic challenge, I believe it is essential that the Democratic Congress closely examine the facts of history and not ignore the role of the largest players at the center of the economic debacle: Fannie Mae and Freddie Mac.

Republican’s have been scrutinizing these mortgage giants since 2004, when they called hearings after reports of fraudulent accounting activities at Fannie Mae and Freddie Mac.  These reports showed that Fannie was reporting false earnings in a way that triggered extra bonuses to company executives and also brought to light significant problems with the portfolios maintained by both Fannie and Freddie – especially the fact that they held trillions of dollars in risky mortgage backed securities.

During the House Financial Services Committee hearings, Committee Republicans made their initial call for reform and increased oversight of Fannie and Freddie, asked the tough questions and successfully passed H.R. 1461, the Federal Housing Finance Reform Act of 2005. All the while, Committee Democrats claimed there was “no crisis”, called the regulator “incompetent” and were viscerally angry at the idea that problems could be occurring at Fannie and Freddie.

I strongly supported H.R 1461, and had its consideration not been blocked by liberal Democrats in the Senate, it would have restructured both Fannie Mae and Freddie Mac, created massive oversight and inevitably prevented Fannie and Freddie’s $1 trillion buying binge of risky subprime and mortgage backed securities between 2005 and 2007. 

From 1990 to 2005, Fannie and Freddie grew more than 944% to $1.64 trillion, while their liabilities grew by 980% to $1.51 trillion. The two gambled with taxpayer dollars and lost. Between 1998 and 2008, they spent nearly $175 million combined lobbying Congress, and between 2000 and 2008, Fannie and Freddie employees contributed nearly $15 million to the campaign coffers of congressional candidates and party committees.

Republicans have been trying for years to reform the two mortgage giants, but because of liberal Democrats Fannie Mae and Freddie Mac were able to continue with their unethical policies and dangerous predatory lending that has laid the foundation for the economic troubles that is having an impact on every single taxpayer in America.

In yet another effort to reform Fannie and Freddie, I, along with many of my Republican colleagues will be sending a letter urging the current regulator of Fannie Mae and Freddie Mac to bring increased transparency to their past financial dealings and decision making. I believe that providing open access to the documents and financial paperwork of these two massive organizations would go far towards helping Congress and the nation not only understand what failed, but also make the necessary changes to prevent us from going down this road again.

My Republican colleagues and I continue to demand a bipartisan committee hearing to expose the root of the issue and create a necessary and complete review of Fannie Mac and Freddie Mac. In order to bring the key facts to the American people, the hearing must include testimony from former executive Frank Raines and other former Fannie and Freddie executives.  There have been serious problems with Fannie and Freddie since 2004, and these problems, having grown, are some of the key causes of our current economic crisis.

Posted by Henry E. Brown (10-15-2008, 06:00 PM) filed under Economy

 

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