Sorry, Mr. Speaker, Credit Unions are Not GSEs
For the second time in a recent presidential debate where he seeks to answer his opponents' charges about his firm's years of quite profitable (and, according to most sources, completely legal although an issue he has found tough to defend in today's "bubble burst" real estate market) consulting engagements with Freddie Mac, former Speaker Newt Gingrich has now twice misstated facts about credit unions so severely in his attempt to deal with these GSE-oriented questions that it has to be either an intentional effort to mislead or he does not understand what credit unions are.
Either is troublesome for credit unions. And, now that he has done it two times in two separate debates, it cannot be a mere oversight on his part. One of those problems, lack of candor or lack of comprehension, must be the case. And the record must be set straight.
In fact, the concept of a GSE was not even a gleam in an ambitious congressman's eye in those days, and we would not see the advent of the government-sponsored enterprise as we know it today until the 1980s. Tax treatment does not make credit unions a GSE any more than it makes the American Cancer Society one.
No, Mr. Speaker, credit unions are not GSEs. While we in credit union land don't claim that all GSEs are automatically evil and many credit unions have mitigated a great deal of risk by underwriting to their standards and selling mortgages to Fannie and Freddie over the past several decades, we understand that true GSEs have both positives and negatives associated.