The Federal Housing Finance Agency (FHFA) announced on Thursday that it would allow Fannie Mae and Freddie Mac to resume contributions to two housing trust funds, a move Republicans said puts taxpayers at risk.
The housing giants were previously barred from allocating money to the funds since their bailout in 2008. Democrats argue that they are vital sources of affordable housing in low-income areas.
However, Fannie and Freddie remain under government conservatorship and continue to hand over all of their profits to the Treasury Department—meaning that they have no capital to absorb losses in the event of another financial crisis.
Sen. Richard Shelby (R., Ala.), incoming chairman of the Senate Banking, Housing, and Urban Affairs Committee, said in a statement that it was "misguided" to restore money to the housing "slush funds."
"FHFA’s decision to begin capitalizing the Housing Trust Fund and the Capital Magnet Fund from [Fannie and Freddie] is misguided," he said. "With nearly zero capital protecting the taxpayer from losses, Fannie Mae and Freddie Mac are clearly not in the proper financial position to restore contributions to these slush funds. I strongly oppose [FHFA] Director [Mel] Watt’s decision and will continue to fight to protect taxpayers."