Finance

Senators push back against using guarantee fees to offset spending

A bipartisan group of senators are pushing back against possible plans to use revenue generated by mortgage giants Fannie Mae and Freddie Mac to offset federal spending.

Led by Sens. Mike Crapo (R-Idaho) and Mark Warner (D-Va.), a dozen lawmakers introduced a measure on Tuesday that would raise a budget point of order preventing the Senate’s use of the guarantee fees charged by Fannie and Freddie if a budget uses them to pay for other initiatives.

{mosads}”Guarantee fees should be used to protect taxpayers from risk, but some want to increase these fees simply to create a piggy bank for Congress,” said Warner, a member of the Senate Banking Committee.

“Raiding Fannie and Freddie G-fees to pay for unrelated federal spending only makes that goal more difficult to reach,” he said. 

The lawmakers argue that when guarantee fees, which are used to protect taxpayers against losses on the mortgages Fannie and Freddie back, are diverted for unrelated spending by Congress, taxpayers are left exposed to additional risk and homeowners pay for the fee in the mortgages.

They also argue that using guarantee fees as an offset will make it even harder to overhaul the housing finance system because it will increase the cost of any legislation that would wind down Fannie and Freddie. 

“Congress must get serious about reforming Fannie and Freddie and stop treating them as political entities,” Crapo said.

“Any increase of guarantee fees should be used to protect taxpayers from mortgage losses — not used as an artificial offset for new government spending,” he said. 

Crapo worked last year with former Senate Banking Chairman Tim Johnson (D-S.D.) on a bipartisan measure that would eventually eliminate Fannie and Freddie. 

They used a measure crafted by Warner and fellow Banking committee member Sen. Bob Corker (R-Tenn.), who is backing this effort. 

So far, this Congress hasn’t ramped up the push for fresh legislation. 

Fannie and Freddie have been under government control since the financial crisis hit in 2008. 

Overall, the legislation would ensure that a congressionally mandated increase of guarantee fees can only be used for deficit reduction and will not be scored as an offset. 

A 60-vote threshold would still be required on a provision that spends more or reduces taxes and is offset with a guarantee fee increased because the fee would not be recognized as an offset.

The bill is co-sponsored by Senate Banking Committee Chairman Richard Shelby (R-Ala.) and Sens. Jon Tester (D-Mont.), Heidi Heitkamp (D-N.D.), David Vitter (R-La.), Joe Donnelly (D-Ind.), Mark Kirk (R-Ill.), Dean Heller (R-Ne.), Tim Scott (R-S.C.) and Jerry Moran (R-Kan.).

Tags Bob Corker David Vitter Dean Heller Fannie Mae Freddie Mac Guarantee fees Heidi Heitkamp Jerry Moran Joe Donnelly Jon Tester Mark Kirk Mark Warner Mark Warner Mike Crapo Mike Crapo Tim Johnson Tim Scott
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