Today, ATR sent the following alert to all Senate offices urging them to support Sen. Vitter's amendment to strike Title 12 from the financial reform bill. This Title creates Fannie Mae 2.0 and continues the failed policies of the past. Call your Senator and urge them to support Sen. Vitter's amendment.
Americans for Tax Reform urges all members to support Sen. Vitter’s (R-LA) amendment to S. 3217, the Restoring American Financial Stability Act of 2010.
Title 12, misnamed “Improving Access to Financial Institutions” on page 1398, creates Fannie Mae 2.0 and must be removed.
Fannie Mae collapsed because it became a slush fund for bad loans the government forced banks to make. Now, Title 12 – which was shoved in the bill during the final minutes before it passed out of Committee – will do the exact same thing:
o This Title pays banks to advertise to, and seek out, low income people who would otherwise not qualify for loans
o The bank, backed by the government, issues risky loans
o The bank is now in a win-win situation
o Either the loan is paid back on time, in which case the bank keeps all the profits, or
o The loan defaults and the government uses taxpayer money to cover the bank’s loss
This scenario contains the exact same moral hazard which led to Fannie Mae’s meltdown. Do not allow these same risky practices to continue. Vote “YES” on Sen. Vitter’s amendment to remove Title 12.
Do not allow Fannie Mae 2.0 to happen again – remove Title 12 and vote YES on Vitter Amendment