Udall Statement on Takeover of Fannie Mae and Freddie Mac

Press Release

Udall Statement on Takeover of Fannie Mae and Freddie Mac

Today Congressman Mark Udall (D-Eldorado Springs) released the following statement after Federal regulators seized control of Fannie Mae and Freddie Mac with the intent of stabilizing the housing and financial markets:

"I support the Treasury Department's decision to assume temporary control of Fannie Mae and Freddie Mac, and to provide equity, as needed, to ensure their solvency. When Congress passed comprehensive housing legislation this summer, I was hopeful the federal government would not have to use the bill's authority to intervene in the operations of Fannie Mae and Freddie Mac. Yet this proactive step is now necessary to protect the stability of our financial markets in the U.S. and abroad. Were either of them to fail, the potential economic slowdown, lack of fluidity in the marketplace and lost jobs could be devastating.

"While I will review the plan in greater detail, the Treasury Department's backing appears significant enough to weather the current turmoil in the housing market, and places the interest of the American taxpayer ahead of all other shareholders through the establishment of Preferred Stock Purchase Agreements, in which Treasury receives senior preferred equity shares and warrants that protect taxpayers. The plan must not serve as a bailout for shareholders, and, in fact, places common shareholders last in terms of claims on the assets of Fannie Mae and Freddie Mac.

I'm disappointed that the Bush administration's failure to provide even minimal oversight of these government sponsored entities has resulted in the need for a far larger government intervention to protect our nation's economy. It seems clear that further steps may be needed to ensure the long-term viability of Fannie Mae and Freddie Mac, but in the meantime, for the sake of the housing industry and the overall economy, we must act to preserve their ability to operate."

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