Housing government service enterprise reform is here, and Congress needs to take action.
Fannie Mae and Freddie Mac were bailed out by the federal government in 2008 via $188 billion and since that time have repaid more than $200 billion back to American taxpayers.
The government owns about 80 percent of the value of both GSEs, and the taxpayer is now holding the risk if the companies fall back into non-profitability.
Currently, the two GSEs are raking in profits, and the federal government is sweeping in all of the company’s profits based on an amendment added to the bailout terms in 2012 where 100 percent of the quarterly profits of the companies are “swept” right into the treasuries pocket until the companies “are in a sound and solvent condition.”
Using AIG and General Motors as precedent, it does not seem to me that this is legal to be able to take a company’s profits indefinitely even after all the money owed to the government plus more has been paid back.
Congress has the ability to take action and take a stand for personal property as well as the rights of public shareholders. In the case of General Motors, whether or not you agree with the government bailout, GM paid its money back and shares were sold back to investors, who now hold the risk if the company were to go bankrupt again.
The government stands to make huge profits and release risk by selling shares back to the public.
Government officials should quickly pass new laws that would give the risk of bailed-out companies back to the public and ensure we do not live in a future when if it is profitable, then the law can be broken.