By J. Preston Carter, J.D., LL.M.
Several senators sent a letter to Federal Housing Finance Agency Director Mel Watt urging him to avoid taking steps that might help the release of government sponsored enterprises—Fannie Mae and Freddie Mac—from conservatorship without comprehensive reform. The letter requests that, as Congress "looks to reengage on the issue in the coming months," Watt continues to take "incremental steps" regarding housing finance reform.
In their letter, Sens. Bob Corker (R-Tenn), Mike Crapo (R-Idaho), Heidi Heitkamp (D-ND), Dean Heller (R-Nev), Jon Tester (D-Mont), and Mark Warner (D-Va) said that "the pre-crisis GSE model came with a laundry list of government-provided benefits that gave the GSEs a competitive advantage in the market and put taxpayers at risk."
According to the senators, the benefits "facilitate a government-backed duopoly that led to excessive risk-taking and cost taxpayers and the economy dearly." They said that "changes will be needed to the existing structure," which "should come through housing finance reform legislation, not unilateral action by this or any future Administration."
In a press release, Corker said that housing finance reform remains the last major piece of unfinished business of the financial crisis. "[R]ecapping and releasing Fannie and Freddie without reform would keep taxpayers on the hook for future bailouts," he continued. "It is my hope that Director Watt will avoid any measures that would hinder the ability to pass bipartisan reform legislation in the future."
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