Washington, D.C. – The Council for Citizens Against Government Waste (CCAGW) today urged the Senate to pass S. 190, a comprehensive reform plan for the nation’s housing government-sponsored enterprises (GSE), Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System. 

Below are excerpts from the letter sent by CCAGW President Tom Schatz to the Senate: 

In February 2006, Fannie Mae released the Rudman Report, delving into the company’s extensive accounting irregularities.  That report detailed a corporate culture of arrogance, corner-cutting, and obstructionism and deemed the company’s accounting practices “grossly inadequate.”  Yet, within days of the release of that report, Fannie Mae executives announced the discovery of brand new accounting errors.  And again, on May 9th, the company announced that it would be unable to file quarterly financial statements due to the discovery of even more accounting errors.  The company has been unable to file timely financial statements since July 2004 and the full extent of its future earnings restatement remains unknown.  Tomorrow, the Office of Federal Housing Enterprise Oversight (OFHEO) will release its own report into the accounting fiasco at Fannie Mae, which will paint an even more comprehensive picture of the GSEs’ accounting manipulation.  The Securities and Exchange Commission and the Justice Department are also looking into the matter.  None of these developments have been reassuring to taxpayers. 

Yet, GSE reform has languished in Congress, always waiting for yet another shoe to drop.  Congress is in danger of seeing “too many trees, too little forest,” to borrow a phrase from The Washington Post columnist Steven Pearlstein.  The bigger picture is the serious danger that GSEs pose to taxpayers, who would certainly be called upon for a bailout.  We urge the Senate not to wait any longer to enact S. 190, which will create a new federal regulator with significantly enhanced oversight and enforcement powers.  The bill would also shrink the size of the GSEs’ investment portfolios.

CCAGW urges you to approve the right bill for taxpayers and the financial system as a whole by voting in favor of S. 190.  All votes on this legislation will be among those considered for CCAGW’s 2006 Congressional Ratings.    

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.