US Sen. Bob Corker speaks at Blount Partnership event at Maryville College
By Joel Davis | (firstname.lastname@example.org)
U.S. Sen. Bob Corker, R-Tenn., hopes the federal government will finally deal with unfinished business from the 2008 credit crisis.
During a Blount Partnership event at Maryville College, Corker briefed the audience on his Housing Finance Reform and Taxpayers Protection Act. The legislation would replace the Fannie Mae and Freddie Mac government-sponsored enterprises with a privately capitalized system that would protect taxpayers from future economic downturns.
“We have an opportunity to finally deal with the Fannie and Freddie issues we didn’t deal with back in 2008,” Corker said. “They are two entities that the government owns. They have $5 trillion worth of mortgages that they have guaranteed.”
When the enterprises failed in 2008, both went into conservatorship, and the U.S government stepped in.
“They were insolvent,” Corker said. “We as taxpayers stepped in and put $188 billion into them back in 2008.”
Fannie and Freddie were nationalized during the 2008 financial collapse and bailed out with taxpayer-funded loans. The two enterprises don’t directly make loans but buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. Fannie and Freddie currently own or guarantee half of all U.S. mortgages and back nearly 90 percent of new ones.
“We finally have an opportunity to deal with those entities in such a way that we dismantle them over a five-year period. We’ve developed something that I think will work, and I think we’re finally going to have an opportunity to deal with that issue in a positive way.”
Corker described legal maneuvering surrounding the fate of remaining private stock in the enterprises as a looming “bloodbath” but remained steadfast about the importance of ending them.
“Good luck,” he said. “Go to court. Our bill ends them. I don’t think junior preferred shareholders are owed a dime because (Fannie and Freddie) would still be insolvent if you hadn’t been standing behind them.
“My goal is to end Fannie and Freddie. You can decide in courts what happens to the dividends. It’s going to get messy. A bunch of hedge funds have bought a ton of shares for pennies on a dollar. ... On behalf of you, I hope they do not win.”
Concerns on Egypt
Corker, a ranking member of the Senate Foreign Relations Committee, is concerned about ongoing violence in Egypt. Corker has also been traveling to portions of the Middle East, including Turkey, Iraq and Jordan, to speak with U.S. and foreign officials regarding regional political and security issues.
“We have 4.5 percent of the world’s population, but we have 22 percent of the world’s economic output,” Corker said. “When we see things that threaten economic security, it looks like it is far away, but it affects us.”
One example of how unrest in Egypt could end up affecting the U.S. is in the operation of the Suez Canal. “We get priority transportation through the canal right now,” Corker said. “It’s a very important passageway for a lot of commerce that matters to us in Blount County and to people all across the state.”
World security issues matter to the United States, Corker said. “Over time, insecurity affects our country in a big way.”
Corker believes that the U.S. should suspend military aid to Egypt for the time being.
“We should have a suspension, but I don’t think it ought to be permanent,” he said. “There is nothing that is really going to change anyway for the next month to two month. I do think we should recalibrate our relationship and focus on those things that are directly in our national interests.”
Foreign aid should be scrutinized, but it should not be cut off completely, Corker said.
“We could cause our aid to be spent more wisely. There are a lot of areas of aid we need to focus on, but to say that we should stop giving aid because people don’t like us. ... We do it because of the interests of people in Blount County and Knox County and Sevier County and Loudon County.”
The soft power of foreign aid can be utilized in ways to prevent direct conflict with other countries, Corker said.
“Our aid in many ways keeps us from sending men and women in uniform into conflict.”
Tennesseans re-elected Corker to a second term in the U.S. Senate in November 2012. Corker had a successful business career before serving as state commissioner of finance and as mayor of Chattanooga.
The Associated Press contributed to this report.