Rep. Hill sponsors bill to prevent Treasury from selling GSE preferred shares

French Hill
Rep. French Hill (R-AR) introduced a bill that would prevent the U.S. Treasury Department from selling its Government-Sponsored Enterprise (GSE) preferred shares.

Further, the bill, called the GSE Jumpstart Reauthorization Act of 2017 (H.R. 4560), would require the GSEs to pay dividends to the Treasury Department prior to making annual payments to the Housing Trust Fund.

“By allowing the GSEs to retain earnings is beside the point,” Hill said. “The U.S. Treasury still backs the GSEs with a line of credit standing at over $250 billion and, while Fannie and Freddie remain in conservatorship, the taxpayers continue to be on the hook. Rather than increasing taxpayer exposure by withholding money, it is time to mandate that the GSEs pay their bills to taxpayers before growing this Trust Fund.”

The legislation also extends the GSE Jumpstart language in the 2015 Omnibus through Dec. 1, 2019.

In addition, it expands the current provision in the Housing and Economic Recovery Act (HERA), which said the Federal Housing Finance Authority “shall temporarily suspend” GSE payments to the Housing Trust Fund if it believes those payments would weaken their finances.

It also adds a second provision to HERA, stating that if the GSEs fail to pay any of their dividends to Treasury in a year, the FHFA must prohibit payments to the Housing Trust Fund for that full fiscal year.