As Congress works out details this week on a proposed credit plan for Fannie Mae and Freddie Mac, Kentucky’s junior senator says he’s wholly opposed to the idea. U.S. Treasury Secretary Henry Paulson has been pushing the legislation, which is expected to come to a vote this week. The proposal would allow the government to extend credit to the two largest mortgage finance companies in the country.
Republican Jim Bunning says although Fannie Mae and Freddie Mac were created by the government, the government shouldn’t try to help as the housing market declines.
“I was always taught this was a free market economy in the United States, not one that was controlled by the government. The government shouldn’t insure free market risk, and that’s what we’re talking about,” says Bunning.
Paulson’s proposal calls for the government to extend credit to both companies for up to 18 months. The Congressional Budget Office estimates it could cost up to 25-billion dollars.
The two companies guarantee almost half of the outstanding home loans in the country.