- The Washington Times - Thursday, May 27, 2010

ANALYSIS/OPINION:

The oil spill in the Gulf isn’t the only calamity the administration is ignoring. As a result of the BP accident, anywhere from $400,000 to $7 million worth of crude oil is leaking into the ocean each day, threatening widespread environmental damage. A much larger leak - $232 million per day - has come from taxpayer vaults since Sept. 7, 2008, when mortgage giants Fannie Mae and Freddie Mac came seeking the first billion-dollar patch for their fiscal mismanagement. And there’s no plug in sight for that gusher.

The disaster caused by these so-called government-sponsored enterprises (GSEs) threatens even more widespread economic fallout after already causing thousands to lose their homes, their jobs and their way of life. Requests for billions more to shore up the financial ledgers continue to come in, but the administration and congressional Democrats remain silent about their plans to stop the losses. President Obama’s budget promises no more than to “monitor the situation of the GSEs closely” and to “provide updates” on long-term reform proposals. House Financial Services Chairman Barney Frank, Massachusetts Democrat, protected Fannie and Freddie from his own legislation that would break up large private institutions that run into financial trouble. In a fit of bravado, Senate Banking Chairman Christopher J. Dodd, Connecticut Democrat, vowed to “study” the problem.

Rep. Jeb Hensarling, Texas Republican, and Sen. John McCain, Arizona Republican, have introduced serious reform proposals that have been passed over by the majority. Mr. Hensarling will settle - for the moment - for a little bit more openness from what he called the financial Frankensteins.

“The least Congress can do is require frequent and fully transparent disclosures from its regulator, the Federal Housing Finance Administration [FHFA],” Mr. Hensarling told The Washington Times. “Taxpayers have already spent over $145 billion to cover Fannie’s and Freddie’s losses, losses which will likely grow to be tens or hundreds of billions of dollars more. If the Obama administration believes it is worth spending so much money on Fannie and Freddie, then it ought to be willing to justify why to the American people every time they need a new bailout.”

Mr. Hensarling’s latest bill, introduced Tuesday, would require FHFA’s director to testify before Congress before the full Financial Services and Banking committees in the House and Senate whenever Fannie and Freddie seek another taxpayer handout. It’s a simple and non-controversial idea meant to raise the profile of an ongoing disaster that so far has failed to dominate the daily headlines despite its impact on everyone in the country.

The federal responsibility for the Gulf oil spill may be limited, but Fannie and Freddie are creatures of Congress. Government has a responsibility to clean up this mess of its own making.

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