WASHINGTON, D.C. – Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee Vice Chairman Robert Hurt (R-Virginia) delivered the following opening statement at today's hearing on how Government Sponsored Enterprises helped lead to the financial crisis of 2008:
"Mr. Chairman, thank you for holding today's Subcommittee hearing on how Fannie Mae and Freddie Mac and federal housing policy failed taxpayers and helped to lead to the financial crisis of 2008.
"One thing that I hear as I travel across my rural Virginia district – the 5th District – is that Congress must end Washington bailouts. I believe it's our responsibility to end the bailouts of Fannie Mae and Freddie Mac and enact reforms that will protect the taxpayer and strengthen our housing finance system.
"With almost 190 billion dollars in taxpayer funds provided to Fannie Mae and Freddie Mac to date, this has become by far the costliest bailout of the financial crisis.
"As this Committee begins its work on housing finance reform, it is important that we understand what caused these historic losses. Before the housing market collapse precipitated a wider crisis, federal housing mandates required Fannie Mae and Freddie Mac to buy riskier and riskier loans.
"These aggressive actions by the GSE's, aided by their implicit government backing, fed the housing bubble and facilitated the explosion in the market share of subprime and Alt-A mortgages. As Fannie and Freddie purchased and securitized more of these loans, loan originators took this as an incentive to write more subprime and Alt-A loans regardless of their quality.
"As we all know, when the housing bubble burst, the American taxpayers were left to foot the bill. And yet, Dodd-Frank, which was sold to the American people as a reform of our financial system failed to address any of the problems with Fannie Mae and Freddie Mac.
"Now is the time for Congress to act on this issue, and I appreciate Chairman Hensarling and Chairman Garrett's leadership in putting this Committee on a path to fundamentally reforming our nation's housing finance system and protecting the American homeowner and the American taxpayer.
"I'd like to thank our witnesses for appearing before the subcommittee today, and I look forward to their testimony.
"Thank you, Mr. Chairman. I yield back the balance of my time."