Sen. Mike Johanns praises President Barack Obama for proposing the end of Fannie Mae and Freddie Mac.
“You know, the president has got it right on this,” Johanns tells Nebraska Radio Network. “The future of Fannie Mae and Freddie Mac should be very limited. Part of the reason for the financial crisis of a few years ago was these agencies were doing things that got us in trouble. There’s just no place for this model in the future. So, the president absolutely has it right.”
Critics claim Fannie Mae and Freddie Mac contributed greatly to the housing crisis that sparked the financial crisis at the end of 2008 and, eventually, the great recession. Critics say the two agencies encouraged reckless borrowing.
There is no doubt Fannie Mae and Freddie Mac suffered greatly when housing collapsed. Congress approved a $188 billion bailout of the two.
Fannie Mae and Freddie Mac have a huge impact on the housing market. The two buy mortgages from lenders, package them as bonds to sell to investors, guaranteed. They guarantee up to half of all the mortgages held by Americans and have a hand in nearly all new mortgages.
Johanns says the president’s proposal mirrors a bill he has cosponsored with Sens. Bob Corker (R-TN), Jon Tester (D-MT) and Mark Warner (D-VA). Johanns says taxpayers should never have been forced to bailout Fannie Mae and Freddie Mac.
“If this bill would have been in place during the financial crisis, there would have been no taxpayer exposure,” according to Johanns. “So, what we need to do is get taxpayers paid back and we can accomplish that. I’m really convinced of that.”
Johanns says Fannie Mae and Freddie Mac need to be phased out over the next five years and their duties shifted to the private sector.
AUDIO: Sen. Mike Johanns discusses President Obama proposal to phase out Fannie Mae and Freddie Mac. [1:30]