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Bob Corker’s “Jump Start GSE Reform” Will Only Prolong the Conservatorship of Fannie Mae and Freddie Mac

Bob Corker’s “Jump Start GSE Reform” Will Only Prolong the Conservatorship of Fannie Mae and Freddie Mac

Today’s Washington Post editorial “A New Housing Finance System” threw support behind legislation being championed by Senator Bob Corker (R-TN) that would prevent Treasury from selling any of its preferred equity in Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) without Congressional approval. Ironically, putting the title of the editorial aside, there was very little in this piece which actually discussed a new housing finance system, and the editorial even admitted that Corker’s bill wouldn’t create one.

In fact, Corker’s legislation would do nothing to hasten GSE reform but would bog it down even more. Congress has done nothing to address the conservatorships in the seven years since they were originated in 2008. Waiting endlessly for Congress to get its act together only perpetuates the status quo, the worst of all possible worlds – where the two largest financial institutions in the United States are running with no capital.

Earlier this month, the Jumpstart GSE Reform Act appeared to be headed for fairly quick consideration by the Senate since it was tied to a broadly popular bill to limit compensation of the Fannie Mae and Freddie Mac CEOs, and because it had the...


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