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John Berlau, Competitive Enterprise Institute: Risking Taxpayers’ Money at Freddie Mac

November 23, 2017

Home mortgage backers, underwritten by taxpayers, could get $100 billion in taxpayer bailout money, according to Competitive Enterprise Institute’s John Berlau.

Competitive Enterprise Institute senior fellow John Berlau talks about a new report explaining how Fannie Mae and Freddie Mac, home mortgage backers underwritten by the federal government and taxpayers, could suck up $100 billion of taxpayers’ money, in the event of an economic recession.

According to the government’s own data, Berlau says, Fannie Mae and Freddie Mac would need up to $100 billion in new bailout money from taxpayers, if interest rates changed or economic volatility hit the country’s markets.

Additionally, Berlau says the Obama administration imposed a permanent, unfair policy in which the federal government seizes all profits from Fannie and Freddie, hurting both taxpayers and the companies’ private shareholders.

Many average Americans own stock in Fannie and Freddie through pension funds and individual brokerage accounts, according to Berlau. The government's current profit-seizing policy hurts American investors, and sets a dangerous precedent of  seizing private property for public use without compensation. 

Congress needs to take steps to return the housing market to private lenders and borrowers, Berlau says, and should also set up a commission to make sure Fannie and Freddie shareholders are compensated.
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Government Spending
Author
Jesse Hathaway is the managing editor of Budget & Tax News, a publication of The Heartland Institute.
jhathaway@heartland.org @JesseinOH
Author
John Berlau is a senior fellow at the Competitive Enterprise Institute and a policy advisor to The Heartland Institute.
JBerlau@cei.org @jberlau