FOR IMMEDIATE RELEASE: July 28, 2008
CONTACT: Matt Mackowiak
Sen. Hutchison Votes against Expensive Housing Bailout
Voted in Favor of Housing Bill Twice Previously, Amendments were not permitted
WASHINGTON -- U.S. Senator Kay Bailey Hutchison (R-TX) today voted against a massive housing bill because it included a bailout of Fannie Mae and Freddie Mac which Senators were not permitted to improve by offering amendments.
Twice before, Sen. Hutchison voted for a version of this housing bill which did not include the bailout, but did include several aspects she supported, including modernizing the Federal Housing Administration, assistance for first-time homebuyers, and property tax relief for current homeowners.
FLOOR REMARKS:
“Mr. President, I rise today to speak about the housing bill that’s before the Senate.
“Like all of my colleagues, I am concerned about the current housing crisis.
“The American people are anxious that the equity they’ve paid into their homes may not provide the financial security that home ownership once guaranteed.
“Worst of all, many homeowners across the nation, struggling with higher energy and food costs, are at risk of losing their homes through foreclosure.
“The legislation before us has positive aspects – including modernizing the Federal Housing Administration to provide better, fixed rate lending options to those who previously resorted to risky subprime loans.
“This will expand homeownership.
“I am pleased that the bill also includes assistance for first-time homebuyers and property tax relief for current homeowners.
“The standard deduction for property taxes, included in this bill, would be $500 for single filers and $1,000 for joint filers and that’s important.
“I am also pleased that the bill before us provides some reforms for Fannie Mae and Freddie Mac.
“With a new, independent regulator, I hope we can prevent some of the irresponsible behavior these enterprises have engaged in over the last few years.
“But, Mr. President, it is how we are responding to that irresponsible behavior that will ultimately lead me to vote in opposition to this bill.
“I am troubled by the inclusion of an unlimited U.S. Treasury credit line for Fannie Mae and Freddie Mac, including the authority for the U.S. government to purchase stock in these private companies without the necessary intervention in their governance.
“With our anticipated action today, Fannie Mae and Freddie Mac will have the full faith and credit of the United States.
“However, they have demonstrated spending habits that should not be underwritten by American taxpayers.
“Furthermore, I am concerned that with this new authority we’ll set a dangerous precedent and provide incentives for other private financial institutions to ignore risks in the future.
“Privatize profits for socialized risk to a slippery slope.
“This addition to the previous bill we passed will increase the statutory limit of the current national debt to $10.6 trillion, an $800 billion increase.
“We could improve this bill substantially if individual Senators were allowed to offer amendments on which the Senate could vote.
“But we are being prevented from doing that.
“Senator DeMint has introduced a commonsense amendment to prevent Fannie Mae and Freddie Mac from lobbying Congress or making political contributions.
“According to The Politico, “over the past decade, Fannie Mae and Freddie Mac spent nearly $200 million on lobbying and campaign contributions.”
“These activities shouldn’t be allowed to continue.
“I would support the DeMint amendment.
“I also believe that we need checks on executive compensation and perks at Fannie Mae and Freddie Mac, with this kind of infusion of taxpayer backing.
“In 2003, the CEO of Fannie Mae, who left during an investigation of accounting irregularities, was paid $20 million.
“In 2007, the current Chairman of Freddie Mac pocketed nearly $19.8 million.
“Considering that this bill permits the federal government to become a shareholder in Fannie Mae or Freddie Mac (and thus, operated with U.S. tax dollars), that level of pay is simply unacceptable.
“The U.S. Senate can, and should, spend time debating these issues and improving the bill instead of rubber stamping additions that pose a taxpayer liability of billions, and maybe trillions.
“But instead, the bill is being rushed through the Senate without the careful consideration and deliberation it deserves.
“This is irresponsible.
“While I think it’s important to restore confidence in Fannie Mae and Freddie Mac, and alleviate the housing crisis in our country, I think we should do better. I cannot support the housing bill in its current form.
“I have supported this bill twice before when it came through the Senate without the keys to the Treasury being handed to Freddie and Fannie.
“With this addition and without adequate reforms to protect taxpayers, it is a step too far.
“This bill may ultimately create more problems than it solves.
“Newspapers across the political spectrum, from the Wall Street Journal to the Washington Post, have questioned the desirability of a GSE bailout.
“The Washington Post editorialized that the bill would “potentially increase the very risks [the] plan is intended to mitigate,” and asked “wouldn't it be wiser to revamp the whole GSE structure, rather than construct an increasingly elaborate apparatus to address -- or conceal -- the fact that it no longer works very well?”
“Mr. President, there are potentially 800 billion reasons why we ought to take our time to consider this bill.
“I think we should help alleviate the housing crisis, but the American taxpayers have the right to expect a serious, long-term solution rather than a quick fix that puts them on the hook today and keeps them there tomorrow.
“Mr. President, though I support many of the provisions in this bill, and supported previous versions the Senate considered, I will vote against this bill due in large part to these enormous taxpayer liabilities that this institution will not have the ability to amend.
“If this bill does become law, we should not abandon our oversight responsibility to ensure that any actions taken by the Treasury will be fair and responsible to America’s taxpayers, homeowners, and financial institutions.
“We owe the taxpayers our vigilance.
“Thank you, Mr. President. I yield the floor.”
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