Senator Joe Pennacchio (R-26) says he agrees with Governor Corzine’s comments on policy regarding federally backed mortgage lenders, and says legislators should keep the Governor’s words in mind as they debate the Transportation Trust Fund in the fall.
In published reports Corzine said the following about Fannie Mae and Freddie Mac, two mortgage lenders created by the federal government and bolstered by billions of dollars in government support:
“I don’t think we can continue with the schizophrenic view that we have today, sort of part-public company, part-private company, where the leaders of the company do well when things are going well but then the government and the public and the taxpayer have to bail them out when it goes bad.”
The Governor went on to say, “The fact is that we have to have a clear definition of what the mission of Freddie and Fannie is and if it is to serve the public, then it ought to be owned by the public where the risk and rewards are controlled by the public.”
Senator Pennacchio said, “I couldn’t agree more with the Governor’s comments. That’s one reason why I opposed the creation of the ‘Public Benefit Corporation’ to take over the Turnpike and Garden State Parkway. Just like Freddie Mac and Fannie Mae, the agency wouldn’t truly be independent. Executives could be certain that the government would come in to bail them out at taxpayers’ expense if revenue from toll increases didn’t meet expectations.
“Part public, part-private companies often put government on the hook for billions of dollars of potential liability without adequate safeguards against errors. Executives can take unnecessary risk and run companies poorly when they know the government has shielded them from any risk of failure.
“Finding ways to pay for transportation shouldn’t require the use of new agencies that are difficult if not impossible for taxpayers to hold accountable. There is no question that we can pay for transportation improvements out of our existing budget of $33 billion, an amount that is double what the state spent just 10 years ago.
“The Governor has talked about reducing borrowing, but state debt continues to rise by billions of dollars each year. Now he is talking about the need for agencies to be either public or private, but not both. I ask him to be consistent on this issue, and state that he will not create a new independent body to fund transportation.”
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March 25, 2008
