WASHINGTON, Jul 11, 2008 (BUSINESS WIRE) --
As politicians call for taxpayer bailouts and a government
takeover of troubled mortgage lenders Freddie Mac and Fannie Mae,
FreedomWorks would like to point out that a bailout is a transfer of
possibly hundreds of billions of U.S. tax dollars to sophisticated
investors and governments overseas.
The top five foreign holders of Freddie and Fannie long-term debt
are China, Japan, the Cayman Islands, Luxembourg, and Belgium. In
total foreign investors hold over $1.3 trillion in these agency bonds,
according to the U.S. Treasury's most recent "Report on Foreign
Portfolio Holdings of U.S. Securities."
FreedomWorks President Matt Kibbe commented, "The prospectus for
every GSE bond clearly states that it is not backed by the United
States government. That's why investors holding agency bonds already
receive a significant risk premium over Treasuries."
"A bailout at this stage would be the worst possible outcome for
American taxpayers and mortgage holders, who have been paying a risk
premium to these foreign investors. It would change the rules of the
game retroactively and would directly subsidize the risks taken by
sophisticated foreign investors."
"A bailout of GSE bondholders would be perhaps the greatest
taxpayer rip-off in American history. It is bad economics and you can
be sure it is terrible politics."
SOURCE: FreedomWorks
FreedomWorks
Adam Brandon, 202-942-7612
abrandon@freedomworks.org
Copyright Business Wire 2008
