GOP to hold hearings on GSE reforms—Fannie and Freddie included

Republicans plan to hold hearings in February in hopes of reforming GSEs—government sponsored enterprises like Fannie Mae and Freddie Mac. GSEs are the socialist-progressive model of these times; they’re popular at all levels of government. Bureaucrats and progressive (prog for short) politicians often allude to “public-private partnerships.” That term can easily be interchanged with “crony deals.”

The first hearing will be held by the Financial Services subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. The Daily Caller said the focus will be on “stopping taxpayer losses on housing in the short term, preventing future bailouts and removing government from the housing markets all together.”

Meanwhile House Oversight and Government Reform Chairman Darrell Issa (R-Calif.) has been put in the position of having to defend himself against Rep. Elijah Cummings (D-Md.). Politico said Cummings claimed Issa granted himself “broad new subpoena power” and withheld documents from Democrats.

Issa strongly denied Cummings’ allegations. Ironically when Democrats held absolute power in all three branches of government, Republicans were routinely shut out.

Watchdog group Judicial Watch has also been investigating Fannie and Freddie. JW has assembled numerous official government documents and posted them online, including documents from a congressional meeting held April 6, 2005.

Republicans repeatedly raised concerns about Fannie and Freddie, but voicing those concerns drew outrage from Democrats who because of a lapse in oversight may not have realized the depth of creative accounting that permitted executives to draw record bonuses even as the GSEs were heading over the fiscal cliff. That particular car—a nod to President Barack Obama’s oft-used ‘off the cliff’ metaphor—was driven by prog Democrats.

Fannie and Freddie now guarantee all but a small percentage of US home mortgages. Democrats have done little to prepare for the economic catastrophe certain to occur if the issue of the GSEs is not addressed.

Congress has not examined one very significant issue. Although many were or at the least should have been aware of the systemic chaos in Fannie and Freddie, Democrats did nothing about financial instruments influenced by GSEs until shortly before the election in 2008. Congress should investigate the delay in addressing the chaos to determine why representatives like Massachusetts congressman Barney Frank stymied efforts to do something to head off the current fiscal quagmire.

The Street said approximately $37 billion in preferred shares of the GSEs “were effectively wiped out.” That occurred after the US Treasury Dept. took control in 2008.

Issa has asserted his investigations are aimed at protecting the US taxpayer.

Document from 2005 congressional hearing about Fannie Mae and Freddie Mac. Although accounting procedures were highly questionable, progressive Democrats obstructed all efforts to ward off the pending Freddie Mac and Fannie Mae crisis. [Screen snip from government documents posted online by Judicial Watch]

(Commentary by Kay B. Day/Jan. 31, 2011)