Countering the letter sent to Federal Housing Finance Agency (FHFA) Director Mel Watt from 33 Democrats urging him to lift the suspension of Fannie Mae and Freddie Mac’s obligation to contribute to the National Housing Trust Fund (NHTF) and the Capital Magnet Fund (CMF) (see Memo, 1/24), thirteen Republican Senators signed a letter to Mr. Watt authored by Senator David Vitter (R-LA) urging just the opposite. The letter says that lifting the suspension “would be huge mistake. Ending the suspension while the companies are still in conservatorship and benefiting from a direct line of credit to the United States Treasury would put the American taxpayer at further risk in what is already the most expensive bailout of the financial crisis.”
The Senators do not want FHFA to lift the suspension “until these two failed financial entities are reformed by Congress, the taxpayers are repaid and no longer required to provide a line of credit from the Treasury.” Joining Senator Vitter as signatories are Senators Tom Coburn (R-OK), Mike Enzi (R-WY), John Barosso (R-WY), Pat Roberts (R-KS), Richard Burr (R-NC), Mike Johanns (R-NE), Mike Lee (R-UT), Richard Shelby (R-AL), Jeff Flake (R-AZ), John Thune (R-SD), Ted Cruz (R-TX), Thad Cochran (R-MS), and Saxby Chambliss (R-GA).
NLIHC and others assert that the financial conditions under which the contributions were suspended in 2008 no longer apply now that the companies are making profits again. Under an agreement between FHFA and the Treasury Department, the profits are going into the Federal Treasury. The statute that governs the NHTF and CMF requires the assessment from the companies be “an amount equal to 4.2 basis points for each dollar of unpaid principal balance of its total new business,” with 65% to go to the HTF and 35% to the CMF. The assessment precedes other claims on the companies and is a cost of doing business, just like paying the electric bill. NLIHC estimates that the total amount owed the NHTF as of the 4th quarter of 2013 is $761,187,609.
To read the Republican letter, go to: http://1.usa.gov/1gN9x3U