I was disappointed to read that the United States Senate recently passed a law to raise the limit on the dollar amount of “jumbo” mortgages that Fannie Mae and Freddie Mac are permitted to guarantee. The law will raise the limit of taxpayer guaranteed mortgages from $625,500 to $729,750. U.S. Senator Robert Casey (D-PA) voted in favor of putting the taxpayers on the hook for even more debt guaranteed by the colossal failures, Fannie Mae and Freddie Mac. These massive, debt-ridden government entities already guarantee nine out of ten new mortgages in America today.
This law is wrong for many reasons. First, the law provides taxpayer guarantees to wealthy Americans. Second, the law further distorts the free-enterprise system by the encouraging citizens to become borrowers and to borrow a lot of money to purchase more expensive homes than they should. Third, this type of government program is one of the causes of the housing crisis in the first place by inflating the demand for and the price of housing. Fourth, this law will expand Fannie Mae and Freddie Mac at the same time we should be winding them down.
Recently, Senator Casey stated, “The Administration has an obligation to ensure that taxpayers are not on the hook for risky bets by big banks.” It is ironic that Senator Casey said this given the fact that he voted for the taxpayer bailouts of the big banks and Fannie Mae and Freddie Mac – putting the taxpayers on the hook for trillions of dollars. On the contrary, I believe that we should end Fannie Mae and Freddie Mac, instead of expanding them as Senator Casey tries to do.
By winding down and closing or privatizing Fannie Mae and Freddie Mac, we will limit the risk to the taxpayers of further bailouts and will stop one of the leading causes of the housing bubble and the Great Recession that it left in its wake. By removing the federal government from trying to plan and control the housing market, we will restore the “free” to the free-enterprise system and America will be put back on the path to freedom and prosperity. That is why I am running for the United States Senate.