Americans for Tax Reform submitted testimony today as a House Financial Services Subcommittee takes a look at multiple measures that would protect taxpayers following the fall of government-backed secondary mortgage market giants Fannie Mae and Freddie Mac.  The Subcommittee on Capital Markets and GSEs is reviewing bills that would, for example, cap the amount they can receive from taxpayers, scale back the GSE's spending, and take steps to ensure they pay taxpayers back.  Below is an excerpt and the full testimony can be found here.

When the Housing and Economic Recovery Act of 2008 (HERA) authorized the Treasury Department to purchase the obligations of Fannie and Freddie, it stated that such actions must be necessary to “protect the taxpayer." Yet, since the Treasury Department put Fannie and Freddie in conservatorship, the two institutions have already cost American taxpayers $162.4 billion, a number that is expected to rise even further. There are relatively no protections for American taxpayers caught footing the bill.  If one thing has become clear, it’s that the implied guarantee that the federal government would bail out Fannie and Freddie should they become insolvent is now an explicit guarantee.

…Congress should take steps to ensure taxpayers are repaid for any and all funds received by Fannie and Freddie.  Similar to bailouts of other industries, Treasury has become the primary stockholder of Fannie and Freddie, and pays back the Treasury through dividends or (should they emerge from conservatorship) the sale of stock.  To date, Fannie and Freddie have paid dividends of $24.1 billion, a mere 15 percent of what they have drawn from the U.S. Treasury.

Click here for ATR's full testimony.