Using g-fee revenue to offset other government spending will make reforming Fannie and Freddie “more difficult because it increases the price tag” of any GSE reform legislation, according to committee chairman Tim Johnson, D-S.D., and ranking GOP member Mike Crapo of Idaho.
“Any use of the guarantee fees as offsets would make that effort more expensive for taxpayers and could limit our ability to achieve real reform,” the senators warn in a Dec. 5 letter. Johnson and Crapo are expected to complete a draft of a bipartisan GSE reform bill soon.
Meanwhile, House and Senate budget committee members are trying to hammer out a deal by Dec. 13 and they need $40 billion to $65 billion in offsets.
In December 2011, Congress passed a bill to reduce payroll taxes and extend unemployment benefits. To cover the cost, the legislators hiked Fannie and Freddie g-fees by 10 basis points for 10 years.
The banking committee leaders and housing groups are concerned the budget committee negotiators may resort to another g-fee hike, which could raise $30 billion in revenue, according to some reports.
In a separate letter, the American Bankers Association said it is “extremely concerned” about a diversion of g-fees while the GSEs are in conservatorship.
“It is troubling to create any expectation of long-term revenue from them, because it greatly complicates the already significant task of ending the conservatorships and enacting meaningful GSE reform,” the Dec. 6 ABA letter says.