Two influential Republicans are prodding the US House of Representatives to hasten the hearing regarding the Obama administration’s bailout of Freddie Mac and Fannie Mae, two home funding corporations.
In their letter dated 1 March, Representative Darrell Issa and Jim Jordan slammed Treasury Secretary Timothy Geithner’s announcement last week which stated that legislative initiatives to restructure the companies were unlikely to be implemented before 2011.
In the letter addressed to Dennis Kucinich, chairman of the House Subcommittee on Domestic Policy, and Edolphus Towns, chairman of the House Committee on Oversight and Government Reform, they said that: “The taxpayer bailout of Fannie Mae and Freddie Mac will almost certainly be the most expensive of the financial crisis”.
The US government took control of the two corporations in September 2008 as the housing crisis greatly affected the whole nation. On the eve of Christmas last year, the treasury department handed its support by increasing the credit capabilities of the companies for three years.
Fannie Mae on Friday reported a $16 billion loss for the fourth quarter of last year. It has requested $76.2 billion from the infinite credit line of the treasury department.
On the other hand, Freddie Mac reported on Wednesday a $7.8 billion loss for the same period. The company has already acquired $50 billion or more from the department.
Issues regarding the extent of the mortgage investment collection, as well as executive compensation, were named in the letter as factors as to why the administration should be investigated.
The letter stated that, “The ongoing bailout of Fannie and Freddie and the Administration’s lack of an exit strategy have profound implications for the future health of the U.S. economy and the fiscal solvency of the federal government”.
Democratic Representative Barney Frank has asked Housing and Urban Development Secretary Shaun Donovan and US Treasury Secretary Timothy Geithner to testify on the inquiry.
