Congressman Poliquin Grills FHFA Director Mel Watt


Bruce Poliquin isn’t wasting any time getting his feet wet in Washington. Yesterday, at his first Financial Services Committee meeting, Poliquin had the opportunity to question Federal Housing Finance Agency Director Mel Watt, on the status of Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation), two Government-sponsored enterprises (GSEs).

In September of 2008, Fannie Mae and Freddie Mac were placed into conservatorship, that is run by the FHFA. This was in response to the subprime mortgage crisis, the combined losses of $14.9 billion, and concerns about the ability of Fannie Mae and Freddie Mac to raise capital and debt, which threatened to further deteriorate the already cratering housing market.

As Congressman Poliquin pointed out during his line of questioning to Watt, the organizations are together responsible for holding more than half – 51% – of all home mortgages in America today. Fannie Mae holds $3.3 trillion in loans, backed up by roughly $10 billion in assets, while Freddie Mac holds $2.2 trillion in loans, backed by roughly $13 billion in assets.

It is regarding that capitalization, and its relatively low level, that Poliquin began seeking answers from Watt. Watch the exchange below:

Watt has stated that his goal is to safely and soundly manage both Fannie and Freddie. Poliquin sought to get him on record, expressing concerns about the low level of capitalization inherent in both organizations, or perhaps suggesting that he thought those low levels were fine.

But Watt had no apparent interest in answering the question. He deflected Poliquin’s question, suggesting he doesn’t hold any personal opinions, he is simply implementing a policy that existed when he became Director.

But Fannie and Freddie are both grossly undercapitalized, and do not operate under the same financial rules that non-governmental large financial institutions have to operate under. For non-GSEs, Dodd-Frank requires that these non-governmental institutions hold substantial amounts of capital in reserve, in the event that something goes wrong. Why then, are Freddie and Fannie, particularly with their history, allowed to be so highly leveraged with little capital? Such organizations, as we’ve already seen, pose a major risk to the taxpayers.

Watt had no interest in answer Poliquin’s question, and simply pointed back to Congress, suggesting they can make changes if they want.

But asking the man in charge of the conservatorship of these institutions whether or not he thought the GSEs undercapitalization posed a risk to taxpayers, and if he thought that the rules should force them to obey the same rules as non-governmental institutions, is not only a fair question, it may in fact be something that could help convince Congress to make changes. Sadly, Watt had no interest in answering the questions.

These complex issues can very often go over the heads of the average America, but they are critically important for the future health and stability of the economy.


  1. Great point Linda. Go get em Bruce! I wish I was in his district so I could have added my vote to his winning margin. I wish we could find someone like him that could knock off Pingree in Dist #1!

  2. I’m just over the district border in Brunswick, so I’m saddled with Chellie. But I really admire Bruce. He’s a tough cookie, which this dialogue clearly shows. Because he has a thorough grounding in fiscal matters, he knows whereby he speaks and can tackle these issues that many Americans don’t quite comprehend. Thanks, Bruce, for going to bat for those in your Maine district and for all Americans on crucial financial matters.


Please enter your comment!
Please enter your name here