Glenn Thompson Reacts to Fannie Mae Takeover

Statement

Glenn Thompson Reacts to Fannie Mae Takeover

Glenn Thompson, campaigning in Clarion on Monday, September 8th, spoke in reaction to news that the federal government has moved to take control of Fannie Mae and Freddie Mac, combined owners or guarantors of half the outstanding mortgages in the United States.

"I congratulate Secretary Paulson on his bold move and certainly hope that this does, in fact, begin to stem the real estate crisis in the United States. Any move that lessens uncertainty should help bring about a much-needed recovery."

"I am, however, saddened that the situation has come to this. Several years ago, in 2005, Republican members of Congress asked serious questions about the health and management of Fannie Mae. While some changes resulted, the dominant partisan politics that has ruled Washington for too long blocked more in-depth inquiries. We are left to wonder if a less partisan response to Republican concerns might have lessened today's real estate crash."

In 2005, Republican questions about the operations of Fannie Mae and Freddie Mac resulted in management changes. The overall operations of the two government sponsored entities remained unchanged. While both Freddie Mac and Fannie Mae are private stock companies, they were established by the federal government to broaden American home-ownership and remained closely associated with Congressional policy until today's takeover.

"I must also express concern," Thompson said, "for the shareholders of these two companies. Many in government have insisted that the shareholders must shoulder the losses that will inevitably result from this takeover and clearly that is what will now happen. We must remember that the aura of government assurance that surrounded these two corporations has led innumerable Americans to invest retirement dollars in their shares, either directly or through mutual funds. Our senior citizens will be hurt as a result, and at least in part, they will be hurt because our Congress has provided tacit assurance that these were safe and well-run companies."

The move toward takeover is expected to stabilize a mortgage market that is currently approaching a tenth of all outstanding loans to tumble into default.

"I sincerely hope and plan to work myself to see that this move does, in fact, slow the crisis in home ownership," Thompson continued. "I also hope to see that the damage done to senior citizens and to retirement savings can somehow be minimized. Most of all, however, I hope we have learned some lessons about the dangers of over-involvement of government in private enterprise, and that we do better in the future."

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