There’s no hiding the fact that Congressman Randy Neugebauer, of Texas’ 19th District, was a Fannie Mae / Freddie Mac enabler who actively opposed the Bush White House’s attempts to reform the Government Sponsored Entities, or GSE’s, just before all financial-hell broke loose and put the nation in peril.
In 2007, Neugebauer wrote a letter to the Treasury Secretary criticizing him for not opening Fannie & Freddie up so that more of Wall Street’s toxic assets could be dumped onto taxpayers. Neugebauer wrote: “By refusing to lift the portfolio caps on the two GSEs, the [Bush] Administration continues to remain overly rigid…” Neugebauer continued with “Now is not the time to tie the hands of GSEs with insufficient portfolio cap flexibility or to micro-manage their portfolio activities…” History tells us that such is exactly what was needed.
The Bush White House had been trying to answer alarm bells about impending doom in the housing credit markets with reforms of the GSEs and Randy Neugebauer opposed those reforms.
The Wall Street Journal pointed out in 2010 that “These days, everyone—even Barney Frank—claims to want to reform Fannie and Freddie. Most Republicans now sound like these columns did for more than a decade, assailing the companies for their systemic risk to the financial system after taxpayers have had to put up $150 billion, and counting, to maintain them as the walking dead.”
“But as the debate over the mortgage giants resumes, the real threshold for GOP leadership ought to be who was right when it counted—that is, who was willing to take on the companies, their Wall Street allies and the housing lobby before the meltdown. The destructive duo [Fannie and Freddie] were long protected by a bipartisan phalanx of Members, and a core group of Republicans on the House Financial Services Committee were among the guardians. They include Gary Miller of California, Randy Neugebauer of Texas and Spencer Bachus of Alabama,” reported the Journal.
In the Neugebauer letters I’ve posted you see this two-faced position clearly. Before the crisis Neugebauer was pushing for allowing portfolio caps to be increased so that more junk debt could be piled into the GSEs by Wall Street’s bad actors. And then after the implosion became public a year later, Neugebauer writes a letter from an opposite position all worried about taxpayers’ exposure to the bad investments and demanding information – a pivot worthy of an Olympic gymnast.