Washington, D.C. (August 3, 2017)—Independent Community Bankers of America® (ICBA) President and CEO Camden R. Fine issued this statement today following the release of second quarter 2017 earnings for GSEs Fannie Mae and Freddie Mac. Both firms reported strong earnings, and as required by the terms of their Preferred Participating Stock Agreements with the U.S. Treasury, will be required to sweep the majority of those earnings, which total just over $5 billion, to the Treasury.
“By any reasonable analysis, the GSEs have more than repaid taxpayers, yet according to the terms of their 2012 agreements with the Treasury, their debt will never be repaid. Moreover, the GSEs’ capital is scheduled to be swept to zero at the end of this year, which will leave two of the largest financial institutions in the U.S. without any capital to protect taxpayers and support the housing market.
“ICBA continues to call on FHFA Director Mel Watt to end this unnecessary destructive sweep of GSE earnings, avoid this self-inflicted crisis and taxpayer bailout by following HERA and require the GSEs to rebuild needed capital. The unknown and unpredictable consequences of an additional GSE taxpayer bailout may disrupt this critical source of funding that community banks and home buyers depend on to support the housing market.
“ICBA supports GSE reform. ICBA’s GSE reform plan provides a clear path for FHFA and policymakers to follow that place the GSEs on sound footing while maintaining broad access for lenders of all sizes. We urge FHFA Director Watt to take the first steps now to end the net worth sweep and require the GSEs to rebuild capital.”
The Independent Community Bankers of America®, the nation’s voice for more than 5,800 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit ICBA’s website at www.icba.org.