Royce legislation part of Republican effort to end the bailouts, protect taxpayers and get private capital off the sidelines
Washington, DC – March 30, 2011 – (RealEstateRama) — Rep. Ed Royce (R-CA), a senior member of the House Financial Services Committee, introduced legislation to permanently abolish the affordable housing goals of the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.
“The passage of legislation in the early nineties required the GSEs to devote a significant portion of their business to specific affordable housing goals,” said Royce. “To meet these goals, the GSEs purchased more than a $1 trillion in ‘junk loans.’ These loans accounted for a large portion of the mortgage giants’ losses; losses that were later loaded onto the backs of American taxpayers. With a price tag that could reach $360 billion, the GSE bailout is the most expensive bailout in history and it could’ve been avoided. It’s time the American taxpayers stopped paying for Washington’s mistakes.”
Royce’s bill permanently abolishes Fannie and Freddie’s affordable housing goals, which were a central cause behind the collapse of the GSEs. The ongoing goal of the GSEs should be to reduce risk to taxpayers, not expose them to further losses.
“Given the damage caused by the excessive government involvement in the housing market, most notably the junk loan market, now is the time to take corrective action,” said Royce. “That is why I have introduced the GSE Mission Improvement Act. This legislation will remove the congressional mandate placed on the GSEs requiring them to dedicate a portion of their business to affordable housing. By eliminating these goals we can correct one of the many errors in the GSE charter and work to scale back the disproportionate level of government support in the housing market.”
NOTE: Royce’s bill is part of an effort by House Republicans to overhaul Fannie Mae and Freddie Mac. Today, Royce joined Rep. Scott Garrett (R-NJ), Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, and other members of the House Financial Services Committee to unveil the House Republican plan to overhaul the GSEs. The overhaul includes a number of bills targeted to end the bailouts, protect taxpayers and get private capital off the sidelines.