As President Obama today signed into law the Dodd-Frank financial regulation bill, two words were left unspoken: Fannie and Freddie. Yet they not only played a major role in creating the housing bubble that led to the meltdown of 2008, they stand today as the primary remaining bailout debtors to the U.S. treasury.
As shown in this chart, the two bankrupt mortgage giants owe almost half — 45% — of the outstanding bailout money from the federal treasury. And as Heritage fellows David John and James Gattuso pointed out in a recent op-ed in USA Today, rather than paying it off, that debt is getting bigger.
“The fight over the changes to U.S. financial regulation was bruising,” writes The Wall Street Journal in a July 17 editorial. “The coming debate over what to do with Fannie Mae and Freddie Mac promises to be even more contentious.” Especially if congressional leaders show no willingness to stop showering Fannie and Freddie with taxpayer funds.