WASHINGTON — Sen. Bob Corker, R-Tenn., on Friday called on Fannie Mae and Freddie Mac to direct profits earned by the government-sponsored enterprises toward efforts to reform the mortgage finance system.
Freddie reported earning $4.5 billion in the fourth quarter. It was the mortgage giant's fifth straight profitable quarter. Although Fannie has not yet reported its fourth-quarter earnings, it said it earned $1.8 billion in the third quarter of 2012. Both entities remain in conservatorship and have borrowed billions from the government.
Corker said while he hopes taxpayers can be reimbursed for the assistance given the two government-sponsored enterprises, their profits should be used to build a new privately-based housing finance system to replace the two companies.
"It's great that Fannie Mae and Freddie Mac are showing an increase in income, but we need to remember that they are making money because the ... [Federal Reserve's] relentless mortgage asset purchases, artificially high conforming loan limits, and years of uncertainty over the new rules for private label securitization have completely crowded out private capital and made Fannie or Freddie the only viable execution option for new loans," Corker, a senior member of the Senate Banking Committee, said in a press release Friday.
"So while I am hopeful that taxpayers can quickly be repaid for their investment in the GSEs, any money that these government owned entities make must be allocated solely toward building a more sustainable 21st century system of housing finance that restores the private mortgage market after years of government dominance."