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Mr. CHAMBLISS. Mr. President, first of all, I thank the chairman for allowing us to debate this amendment this afternoon. I think this is one of the most critical amendments that certainly we have talked about to date, and moving forward, unless we address the issue of the GSEs, as I am going to talk about in a minute, I am not sure we have accomplished anything in this bill.
For all of the potential unintended consequences in this financial regulatory restructuring package, at least one will be entirely intentional--failing to address Freddie Mac and Fannie Mae.
Despite the general theme of the increased ``overreaching'' regulatory power of this legislation, a glaring example of something that was actually left out is a substantive attempt to address one of the most significant causes of the financial crisis--reform of the government sponsored eniterprises, or GSEs, such as Freddie Mac and Fannie Mae.
It has been highlighted from this floor that recent market volatility and a faulty trading construct in our financial markets are illustrations that the bill before us is needed now more than ever. Specifically, the sudden significant drop throughout certain exchanges last week has been pointed to as evidence of the necessity for greater regulation of our markets.
However, when news broke last week that Freddie lost $8 billion in the first quarter and would yet again be knocking on the taxpayer's door for a $10.6 billion bailout--another bailout after both Fannie and Freddie had already received $126 billion in taxpayer dollars--I failed to hear calls for reform from the other side.
And just today it was announced that Fannie Mae will ask for another $8.4 billion after posting a loss of $11.5 billion for its first quarter. Shouldn't these entities' repeated failures serve as ample evidence that the future of these ``bailout behemoths'' must be addressed?
Apparently, this administration feels differently, and has for some time. In fact, while it was busy cutting backroom deals over the health care bill and making noise that a government takeover of health care would reduce the deficit, in the quiet of night on Christmas Eve another deal was made--only this one didn't make it out of the backroom.
At the eleventh hour, after the Senate had finished its vote that holiday eve, the administration pledged to the mortgage its current giants unlimited financial, assistance--by lifting $400 billion cap on emergency aid without even seeking congressional approval.
How can we have a serious conversation about overhauling our financial regulatory structure, yet ignore two entities that have exposed the taxpayers to more than $5 trillion in risk as of today. As the Wall Street Journal put it recently, ``Reforming the financial system without fixing Fannie and Freddie is like declaring a war on terror and ignoring al Qaeda.''
Many have suggested that now is not the time to restructure these giants; that they will have to be addressed later, indicating that due to the comprehensive nature of their needed reforms, any attempt to address the problems of Freddie and Fannie here would more than double the size of the current financial regulatory reform bill.
Where were these legislative ``size standards'' when this body was debating health care? That bill was more than 2,000 pages long. Apparently, while we can address too big to fail, these government sinkholes have become too big to legislate.
The fact is that the number of pages in a bill is not the reason Freddie and Fannie are ignored here. And it is not for a lack of understanding the problem. There has been no shortage of hearings on GSEs, in both the House and Senate. The housing policies of this and previous administrations have chained the taxpayers to a self-perpetuating financial illness. Policies such as the Community Reinvestment Act, or CRA, which forces banks to make loans to otherwise unqualified borrowers set the stage for Fannie and Freddie to buy up these bad loans on the secondary mortgage market.
Such backward policies exacerbated the causes of the financial crises. Why would a bank not make these loans knowing they could turn around and sell them to the government? Especially when regulators were encouraging such practices? As a result, Fannie Mae, Freddie Mac and the Federal Housing Administration, or more specifically, the taxpayer, now own or guarantee about half of all outstanding residential mortgages.
It is time we address this enormous problem, the McCain amendment does that and I urge my colleagues to support it.
Mr. President, I yield the floor.
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