Hill Introduces Bill to Prevent Bailouts of Government-Sponsored Enterprises
WASHINGTON – Congressman French Hill (AR-02) introduced H.R. 4560, the GSE Jumpstart Reauthorization Act of 2017.
This legislation would extend an existing prohibition while preventing the U.S. Treasury Department from selling its Government-Sponsored Enterprise (GSE) preferred shares. It also would require the GSEs to pay dividends to the Treasury Department prior to making payments to the Housing Trust Fund for that year.
“By allowing the GSEs to retain earnings is beside the point,” said. Rep. Hill. “The U.S. Treasury still backs the GSEs with a line of credit standing at over $250 billion and, while Fannie and Freddie remain in conservatorship, the taxpayers continue to be on the hook. Rather than increasing taxpayer exposure by withholding money, it is time to mandate that the GSEs pay their bills to taxpayers before growing this Trust Fund.”
H.R. 4560, introduced December 6, 2017, would do the following:
- Extends the S. 1217, GSE Jumpstart language in the 2015 Omnibus for one year through December 1, 2019. This provision prevents Treasury from selling its GSE Senior Preferred shares and its warrant for 79.9 percent of the GSEs’ common shares.
- Expands the current provision in the Housing and Economic Recovery Act (HERA) that states the Federal Housing Finance Authority “shall temporarily suspend” GSE payments to the Housing Trust Fund if it thinks those payments would weaken their finances. The bill adds a second provision to HERA, which says that if the GSEs fail to pay their any of their dividends to Treasury in a year then FHFA must prohibit payments to the Housing Trust Fund for that entire fiscal year.