To combat "mission creep," a number of taxpayer groups formed a coalition aimed at questioning the activities and regulation of Fannie Mae and Freddie Mac.
Led by the Council for Citizens Against Government Waste (CCAGW), a lobbying group aimed at eliminating mismanagement and abuse in government, the Homeowners Education Coalition will help eliminate what the group calls "mission creep." CCAGW President Thomas Schatz calls this "a common malady of government programs and quasi-government agencies," in which the government-sponsored enterprises are slowly moving beyond their chartered mission.
"Our worry is that the GSEs could become the savings and loans of the coming decade, with taxpayers getting the bill for a bailout that will make the S&L crisis look like chump change," Schatz said at a press conference announcing the coalition. "If Fannie and Freddie continue their attempts to reach into subprime and jumbo mortgages, there is a real danger of collapse." Schatz then referred to a report issued by the American Enterprise Institute for Public Policy Research, (see story page 6).
While the market considers the GSEs "too big to fail," Schatz said that this is the time to do something to avert another crisis.
Also speaking at the press conference was U.S. Rep. Richard Baker (R., La.), sponsor of a bill that would create a new oversight board for the GSEs (MBSL 3/6/00). He proposed that the board formed in his bill would act as "precisely the kind of strong referee for the public interest" needed between the GSEs and the watchdog groups that have been critical of them as of late.
He did not discuss whether the groups were right or wrong to criticize the GSEs for their actions, but he did say that his proposed legislation "should in no way be construed as an attack on Fannie Mae, Freddie Mac or the [Federal Home Loan Bank System]."
HomeEC has formed on the heels of another watchdog group, FM Watch, which is a coalition of financial services and housing related trade associations that formed in the summer of 1999 to monitor the activities of Fannie Mae and Freddie Mac. Fannie Mae responded with FM Watch-Observer to counter FM Watch's statements shortly afterward.
