Democrats continue disastrous housing policy
Image via WikipediaWe all knew it would happen, eventually. After 18 months of delay the Obama administration and Democrats in Congress have come clean on their plans, or lack thereof, to address bailout-dependent Fannie Mae and Freddie Mac.This is only one part of the cost of the Democrats disastrous housing policies. It was their requirement that lenders make clearly bad loans to people who could not afford them that triggered the financial debacle that brought down the banks and other lenders. Fannie and Freddie helped them monetize this debt and work it into the banking system. All the TARP loans needed to bailout these institutions should be added to the debt owed on Democrats failed housing policies.
After refusing to even consider reform of the government-sponsored enterprises (GSEs) during passage of the Dodd-Frank financial takeover bill, they knew they would have to address the 800 pound gorilla in the room. The result was the Obama administration’s “Conference on the Future of Housing Finance.”
The half day-long effort to justify keeping the federal government in the mortgage business was disappointing, to say the least. Rather than honestly addressing the challenge of transitioning out of a home mortgage market backed by the federal government, the Obama administration seems perfectly content with the status quo; a status quo that hides the financial costs from the American taxpayers.
Considering how costly the bailout of Fannie and Freddie has been, it is understandable why Democrats would not want it on budget and counted toward the debt limit. So far the tab left for the American taxpayer to pick-up for the failure of the GSEs stands close to $150 billion. The Congressional Budget Office (CBO) estimates that the final tally will surpass $389 billion when all is said and done.
We believe taxpayers want to know the truth about how much the Obama administration’s disastrous support for the GSEs costs them, and they want the federal government out of the business of guaranteeing and subsidizing home mortgages all together.
That is why we have introduced and cosponsored H.R.4653, the Accurate Accounting of Fannie Mae and Freddie Mac Act, and H.R. 4889, the GSE Bailout Elimination and Taxpayer Protection Act.
The Accurate Accounting of Fannie Mae and Freddie Mac Act would finally peel back the curtain to shed light on the financial makeup of the GSEs by moving them both “on budget.”
Put simply, this would require that taxpayers receive a detailed record of their financial exposure to the failed mortgage giants, something they have yet to see under this administration.
Here’s how it works. It would compel the Office of Management and Budget (OMB) to account for the current actual losses plus all the projected future losses of the GSE’s – the same way the nonpartisan CBO currently does.
Also, the legislation would subject the GSE’s debt to the statutory debt limit – an increase of about $1.5 trillion on top of the current $14.3 trillion debt. For Democrats expecting a tough election in November, no wonder they want to keep these costs hidden from taxpayers.
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We need to stop making most no down payment loans especially for risky borrowers. We need to reestablish guidelines that do not permit loan payments to exceed 25 percent of the borrowers monthly income net of taxes.
See also this piece by Investor's Business Daily.
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