I don't often post about my Congresswoman Michele Bachmann -- we agree about 85% of the time, and where we don't agree I say what I think and move on rather than obsess. (There's plenty of that already.) So posting on something I agree with is not all that interesting normally. But I will shout an alleluia in this case:

Today, U.S. Representative Michele Bachmann (MN-06) took part in a press conference as a cosponsor of the Accurate Accounting of Fannie and Freddie Mac Act. The bill is aimed at instituting a proper and complete accounting for the Government-Sponsored Enterprises Fannie Mae and Freddie Mac.

The Congressional Budget Office estimates that Fannie and Freddie added $291 billion to the federal deficit in 2009 and will cost an additional $389 billion to run over the next ten years. However, Fannie and Freddie are currently considered �off budget� meaning the actual cost to run these agencies is not considered by the Office of Management and Budget. By moving the activities of Fannie and Freddie Mac �on budget�, their financial obligations would then be included in the federal government�s budget and debt projections and provide a more accurate picture of our nation's precarious finances.

�The Accurate Accounting of Fannie Mae and Freddie Mac Act is a much needed remedy for a Washington that needs to come to terms with their spending addiction. One thing we know about Fannie and Freddie is that they cost the already overburdened and financially strapped taxpayer a pretty penny.

�Why should Fannie and Freddie be able to run up these numbers without the President having to reflect this risk in his budget? It just doesn�t make sense, and we owe it to the taxpayers to be transparent and forthcoming on the commitments we�re making with their credit card.�

The Obama Administration has been in the news this month with claims that Fannie and Freddie are not going to be that expensive. After projecting Treasury investments of $230 billion to prop up the two companies, the budget a few weeks ago said the investment would be $188 billion. Of that, about $97 billion is to be returned in dividends from the two firms by 2020. This does not count, alas, the $175 billion inserted into the firms by the Federal Reserve, nor the $1,250 billion of their debt -- mortgage-backed securities -- that the Fed has purchased. San Francisco Fed President Janet Yellen said yesterday that these purchases "were vital in preventing a complete financial breakdown," which might tell us Fan/Fred are still in some rough shape. I don't know that the legislation would count Fed contributions to Fan/Fred.

Not to mention the fact that Fannie and Freddie are now paying off private debt holders of its MBS that are 120 days or more delinquent. It gets bad debt off the books of the two companies, but investors receiving this money are now getting money they cannot reinvest at the rates they used to get. Realizing the losses on those MBS will add to the cost of the bailout of these two firms -- it's worth remembering that the AIG bailout cost US taxpayers a relatively modest $9 billion.

Chief author of the legislation is Rep. Scott Garrett of New Jersey.

Labels: banking, economics, Michele Bachmann