Posted on Monday, February 14, 2011
Rep. Scott Garrett (R-NJ), Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, delivered the following opening statement today at a hearing to examine GSE reform and the steps that can be taken to end the bailout and protect taxpayers:
“On September 7, 2008, Fannie Mae and Freddie Mac were put into conservatorship by the federal government. Over $150 billion and 885 days later – the government-backed mortgage twins remain in conservatorship, the federal government now underwrites 95% of the housing market, and the American taxpayer continues to hemorrhage billions of dollars every quarter to keep them afloat.
“I am pleased to hear that the Department of Treasury is getting closer to unveiling their much-anticipated reform proposal, which I understand could come by the end of this week. If I had known that simply scheduling a GSE reform hearing would facilitate such a swift response, we would have held one sooner.
“While a lot of recent attention has been given to the impending Treasury proposal and what the future of U.S. housing finance will look like, I believe there are other areas of this debate we can focus on right now. In particular, I believe the question we all need to be asking ourselves is: What immediate steps can Congress take right now – this instant – to protect taxpayers, end the bailout, get private capital off the sidelines, and reduce the government’s exposure to the housing market?
“I believe these four objectives should be the driving force behind our immediate reform efforts, and I look forward to discussing a number of reform proposals in greater detail with our esteemed panel. As I can see from their written testimony, there is no lack of ways to protect taxpayers and begin to end this bailout.
“It’s unfortunate that my colleagues across the aisle resisted any attempt last Congress to address the most expensive component of the federal government’s intervention during the financial crisis. I assure you it will be a top priority of mine as chairman of this panel.
“Federal government housing policy has been a monumental disaster and we must find a new way forward. Secretary Geithner said the other day that the new policy should, ‘leave us with a system that will not be vulnerable to the really tragic colossal failures of the past.’ I couldn’t agree more.
“Even the Washington Post is on board with wholesale changes to Fannie and Freddie. In an editorial Monday, the Post wrote: ‘Homeownership does help instill thrifty habits and solidify communities, but it can be taken too far. … The national homeownership rate today has slipped back to its 1998 level, according to the Census Bureau. In terms of building community, etc., it's as if the past 13 years never happened, except for the catastrophic losses to taxpayers - and home buyers. It might be more accurate to say that federal housing policy has helped destroy communities.’
“It will be the goal of this subcommittee to ensure that we put an end to this destructive and costly housing finance policy and replace it with a system going forward that protects taxpayers and actually strengthens communities instead of destroying them.
“I thank the witnesses for being here with us today and I look forward to their testimony.”