(Washington, D.C.) – The Council for Citizens Against Government Waste (CCAGW) today criticized the U.S. Treasury’s rescue scheme for the nation’s two troubled housing government-sponsored enterprises (GSE), Fannie Mae and Freddie Mac, claiming it lacks tough oversight reforms and long-term strategies for dealing with the companies and their risk to taxpayers.

CCAGW President Tom Schatz made the following statement:

“Treasury Secretary Henry Paulson, Jr. and Federal Reserve Chairman Ben Bernanke are leading the charge for an unprecedented rescue of Fannie Mae and Freddie Mac.  Yet they are not taking on Washington politicians, including long-time members of the House Financial Services Committee and the Senate Banking Committee, who were always more interested in their next Fannie Mae or Freddie Mac fundraiser than their fiduciary responsibility to taxpayers.  These politicians have been whistling past a graveyard for nearly a decade, knowing that the GSEs were engaging in increasingly risky behavior, but refusing to enact any meaningful accountability and transparency over these companies.

“Up until this morning, the GSEs and their well-compensated political allies were fond of crowing about the safety and soundness of these two companies.  They routinely used their lobbying muscle to stave off even the most modest and rational oversight reforms, including the mild reforms contained in the current housing bailout bill, in which Congress exposed taxpayers to more risk by expanding the GSEs’ ability to operate in the volatile jumbo market. 

“There is an ‘affordable housing fund’ in the bill that theoretically will be financed from the GSEs’ profits.  With one hand, the government wants to use taxpayer money to shore up the companies; with the other it permits them to siphon off future profits for vague housing projects. 

“One thing is now certain:  the ‘implicit’ government guarantee has now become painfully explicit.  For the first time, the government would directly fund, own, and lend to Fannie Mae and Freddie Mac.  There should be tougher oversight reforms and a long-term strategy to reduce the size of these companies and the taxpayers’ risk.”

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.