Tuesday, December 22, 2015

December 18, 2015 CONGRESSIONAL RECORD — Nor does this provision have any effect on the court cases and settlements currently underway

https://www.congress.gov/crec/2015/12/18/CREC-2015-12-18.pdf
December 18, 2015 CONGRESSIONAL RECORD — SENATE S8857
SECTION 702 IN DIVISION O
Mr. BROWN. Madam President,
today I wish to discuss section 702 in
division O of the Omnibus appropriations
bill. It is a provision that would
prohibit the Treasury Department
from selling, transferring or otherwise
disposing of the senior preferred shares
of Fannie Mae and Freddie Mac for 2
years.
In 2008, Treasury Secretary Hank
Paulson and Federal Housing Finance
Agency Director James Lockhart
placed Fannie Mae and Freddie Mac
into conservatorship and created an
agreement that gave the Treasury Department
senior preferred shares in
both entities. Since that time, the
GSEs helped stabilize the housing market
by ensuring that families had access
to 30-year fixed-rate mortgages at
reasonable rates and lenders had access
to a functioning secondary market.
While the government was initially
forced to inject $188 billion into shoring
up these two agencies, it has since
collected $241 billion. Taxpayers have
thus earned $53 billion during the conservatorship.

Mr. SCHUMER. Madam President,
will the Senator yield for a question? I
am concerned that someone could read
the provision as limiting a future administration’s
authority to end the
conservatorship after the 2-year prohibition
absent congressional action.
Does the provision prohibit a future administration
from taking any action
after January 1, 2018, if it is in the best
interest of the housing market, taxpayers
or the broader economy?
Mr. BROWN. I will say to my colleague
from New York that it does not.
That is not the effect of the language.
Any number of decisions could be made
after that date, when a new Congress
and a new President will be in place.
Nor does this provision have any effect
on the court cases and settlements currently
underway challenging the validity
of the third amendment. As the
Senator from Tennessee said yesterday,
‘‘this legislation does not prejudice’’
any of those cases.
Mr. REID. I associate myself with
the comments of the Senator from
Ohio, Mr. BROWN. If it turns out to be
in the best interest of borrowers, the
economy or to protect taxpayers, the
next administration could elect to end
the conservatorship on January 2, 2018.
This is the view of the Treasury Department
as well. I would like to submit
a letter written to me on this issue
that states that the provision binds the
Treasury only until January 1, 2018,
and has no effect after that.
The agreement for this language to
be included in the omnibus was that
the prohibition would sunset after 2
years and not create a perpetual conservatorship.
As then-Secretary
Paulson described, conservatorship was
meant to be a ‘‘time out’’ not an indefinite
state of being.
Madam President, I ask unanimous
consent that the Treasury letter be
printed in the RECORD at the conclusion
of the remarks by Senator BROWN.
Mr. BROWN. Madam President, I
thank the Majority Leader. The FHFA
and Treasury Department could have
placed the GSEs into receivership if
the intent was to liquidate them. The
purpose of a conservatorship is to preserve
and conserve the assets of the entities
in conservatorship until they are
in a safe and solvent condition as determined
by their regulator.
There being no objection, the material
was ordered to be printed in the
RECORD, as follows:
DEPARTMENT OF THE TREASURY,
Washington, DC, December 17, 2015.
Hon. HARRY REID,
Democratic Leader, U.S. Senate,
Washington, DC.

Mr. Harry REID: I associate myself with the comments of the Senator from Ohio, Mr. BROWN. If it turns out to be in the best interest of borrowers, the economy or to protect taxpayers, the next administration could elect to end the conservatorship on January 2, 2018. This is the view of the Treasury Department as well. I would like to submit a letter written to me on this issue that states that the provision binds the Treasury only until January 1, 2018, and has no effect after that.

The agreement for this language to be included in the omnibus was that the prohibition would sunset after 2 years and not create a perpetual con-servatorship. As then-Secretary Paulson described, conservatorship was meant to be a ‘‘time out’’ not an indefinite state of being.

Madam President, I ask unanimous consent that the Treasury letter be printed in the RECORD at the conclu- sion of the remarks by Senator BROWN.

Mr. BROWN: Madam President, I thank the Majority Leader. The FHFA and Treasury Department could have placed the GSEs into receivership if the intent was to liquidate them. The purpose of a conservatorship is to preserve and conserve the assets of the entities in conservatorship until they are in a safe and solvent condition as determined by their regulator.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

DEPARTMENT OF THE TREASURY,
Washington, DC, December 17, 2015.

Hon. HARRY REID,
Democratic Leader, U.S. Senate, Washington, DC.

DEAR MR. LEADER: In response to your request for our view, the Treasury Department interprets the language of Section 702 of Division O of the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2016, to mean that subsection (b) imposes a prohibition that is binding until January 1, 2018. It would not be binding after that date.

Sincerely,

ANNE WALL,

Assistant Secretary for Legislative Affairs.

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