Seeking to deflect Republican talk of user fees and privatization, top executives from Fannie Mae and Freddie Mac characterized the status quo as best for American taxpayers.
Taxpayers bear no risk but enjoy substantial benefits from the private capital of Fannie Mae and Freddie Mac's shareholders, executives told a Senate panel last week.
"Fannie Mae uses the private risk capital provided by its shareholders to help low, moderate and middle-income families achieve homeownership," said Franklin D. Raines, vice chairman of the government-sponsored enterprise, formally the Federal National Mortgage Association.
"The company receives no federal appropriations, our debt is not guaranteed, and all of our debt instruments are required by law to state plainly that they are not backed by the full faith and credit of the federal government," Mr. Raines said.
Leland C. Brendsel, chairman of Freddie Mac, echoed those themes in his testimony. In response to a question by Sen. Lauch Faircloth, R-N.C., Mr. Brendsel said privatizing his agency, known formally as the Federal Home Loan Mortgage Corp., would be "a travesty."
Mr. Raines and Mr. Brendsel were speaking before the Department of housing and urban development oversight subcommittee chaired by Sen. Faircloth. The potential push for privatization could theoretically strip Fannie and Freddie - already "private" companies - of their special links to the government.
Indeed, their frequent description of themselves as private companies irked at least one senator. Sen. Carol Moseley-Braun, D-Ill., likened the talk to that of a "successful businessman who has a wife at home, who makes sure his socks are matched and his suit is pressed, and he goes off to the job and takes all the credit for being able to perform."
No advocate of privatization, Sen. Moseley-Braun focused on the agencies' affordable housing performance. She acknowledged the work both have done in that area, but urged them to do more.
