Should the Freedom of Information Act Apply to Fannie Mae and Freddie Mac? (H.R. 1694)

What is H.R. 1694?

(Updated April 10, 2018)

This bill would apply the Freedom of Information Act (FOIA) to the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) as long as those government-sponsored enterprises have their finances controlled by the federal government. Once the bill is enacted, FOIA requests could be made for any Fannie Mae or Freddie Mac record.

Argument in favor

Fannie Mae and Freddie Mac played a contributing role in causing the financial crisis, and as long as the federal government is controlling their finances after taking them over public records laws should apply to them.

Argument opposed

Fannie Mae and Freddie Mac are government-sponsored enterprises, not federal agencies, so the Freedom of Information Act shouldn’t apply to them. Besides, this is just a way of scapegoating them for the financial crisis.

Impact

Fannie Mae and Freddie Mac; people who request their records; and the federal government.

Cost of H.R. 1694

A CBO cost estimate is unavailable.

Additional Info

In-Depth: This legislation passed the House Oversight and Government Reform Committee on a voice vote and has the support of 11 cosponsors in the House, all of whom are Republicans.

Of Note: Fannie Mae and Freddie Mac were taken over by the government (i.e. put into conservatorship of the U.S. Treasury) in September 2008. It was one of the many financial events spawned by the ongoing mortgage crisis.

At the outset, GSEs were created to help fulfill the goal of expanding home ownership. While the financial markets accepted this premise, they also assumed that the GSEs would be bailed out by the taxpayer if turmoil hit the housing market because they were fulfilling a government mandate. They felt safe in this view because the FHA insured mortgages with down payments ranging from 3% to 20%, and the Community Reinvestment Act was loosening lending standards.

This arrangement had worked until mortgages in the MBS started to go into default. When mortgage payments stopped being made, the MBS plummeted in value — leaving banks and GSEs in a dire financial situation. Fannie & Freddie had to be bailed out by taxpayers to the tune of $187 billion during the 2008 financial crisis. The FDIC had to close 465 banks between 2008-2012, and the Treasury doled out billions of dollars in bailouts to banks that were close to bankruptcy.

Fannie & Freddie have been able to repay their bailout over the nearly 6 years since the government took them over, however, their future remains uncertain. The GSEs regulator requested plans in 2012 to put them into receivership and liquidate them as ordinary contingency planning.

Media:

• House Oversight and Government Reform Committee Hearing
  
• Nextgov
  
• Competitive Enterprise Institute (In Favor)