The housing collapse of 2008 left devastation in its wake, devastation we are still recovering from today. The sale of subprime, and in some cases, fraudulent loans by the big banks and a whole host of other bad practices led to the crisis and our leaders in Washington are correct in their assertion that housing reform needs to be addressed.
However, the legislation proposed by Sens. Mike CrapoMike CrapoLawmakers play catch-up as smartphone banking surges Senate panel approves pension rescue for coal miners Bank lobbyists counting down to Shelby’s exit MORE (R-Ida.) and Tim JohnsonTim JohnsonBank lobbyists counting down to Shelby’s exit Former GOP senator endorses Clinton after Orlando shooting Housing groups argue Freddie Mac's loss should spur finance reform MORE (D-S.D.) would not only increase risk to taxpayers during a repeat housing crisis, but also refuses to recognize marketplace rules and the rule of law.
In 2008, a conservatorship agreement required that Fannie and Freddie pay the U.S. Treasury a 10 percent dividend payment to repay the loan that was made. To date, the GSEs have repaid $204 billion dollars to the Treasury, tens of billions in excess of what was originally loaned, but the government refuses to exit its conservatorship. To make matters worse, since January of 2013, the government has been confiscating 100 percent of Fannie and Freddie dividends, leaving shareholders with nothing.
It is understandable that our elected officials want to reform the housing system in this country, and reform is certainly needed. But replacing Fannie and Freddie with a new, gargantuan federal entity that would explicitly back mortgages called the Federal Mortgage Insurance Corporation would add $5 trillion to the taxpayer’s balance sheet and give more control of the mortgage market to the big banks.
However Fannie and Freddie are reformed, the rights of individual shareholders must be protected, because those shareholders include pensioners, policemen, firefighters, people invested in mutual funds, teachers, retirees and so many others.
We encourage all Virginians to take a few minutes to examine any investments you have to determine if they are invested in Fannie or Freddie, and if they are to join us fellow investors in our fight to educate lawmakers in Washington about the need to respect our rights as shareholders. Anyone invested in the GSEs can join us at www.investorsunite.org.
Shah, Harrison, Slater and Mial are individual investors in Fannie Mae and Freddie Mac and members of the Investors Unite coalition www.investorsunite.org.
Guari Shah, Ashburn, VA
Elizabeth Harrison, Arlington, VA
Jonathan Slater, Springfield, VA
Brandon Mail, Clifton, VA