Forcing Government to Face Fannie & Freddie

Kevin Glass | February 24, 2010 1:30 PM

Elected officials in Washington have been content to sneak in legislation dealing with the ongoing implosion of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. These mortgage organizations used to be (perhaps in name only) private enterprises with implicit government guarantees. The U.S. government now owns and explicitly guarantees (with no limit) the two organizations, along with the massive amounts of debt they own.

Rep. Scott Garrett (R-N.J.) has introduced a bill to force the government to face up to the responsibility they've undertaken and accurately account for their failures on the government ledger. The Accurate Accounting for Fannie Mae and Freddie Mac Act would include the GSEs in the official government budget.

Government debt is already at record levels, and this would add $1.6 trillion to the government debt. The Act would be merely a formality, but might help us really understand the severity of the fiscal crisis the U.S. government is facing.

As Stephen Spruill reports,

[T]he GOP’s proposal faces a tough road in the House. “We will try to get bipartisan support, and I can think of a few members on their side who should sign on,” Garrett says. “We would hope that with the attention this is getting — and it is getting attention, especially for a dry topic — the administration would take note of this, because they do not need our legislation to do this.” The president has promised numerous times to adopt more honest accounting practices, and this is a step his administration should take unilaterally.