Washington’s Big Housing Problem
The Washington Establishment’s corrupt nexus with “The Bigs” continues.
Last month, 60 Senators voted to reinstate a big-government housing provision straight out of President Obama’s failed stimulus. An array of special interest housing groups lauded the passage of the Senate amendment to a minibus-spending bill. The National Association of Home Builders and National Association of Realtors are two prominent examples…Big Housing, if you will.
Heritage Action opposed the amendment. It would allow the Federal Housing Administration (FHA) to insure, and Fannie Mae and Freddie Mac (the GSEs) to purchase home loans up to $729,750. As of October 1, the level dropped to $625,000. That level should be further reduced, not increased.
Despite receiving some marginal Republican support in the Senate, the Menendez amendment – essentially an endorsement of the 2009 Stimulus – was opposed by every single Republican member of the Senate Banking Committee, which is tasked with overseeing FHA and the GSEs. House Financial Services Committee Chairman Spencer Baucus (R-AL) and the all subcommittee chairmen have also remained silent, except for one: Gary Miller (R-CA), a former homebuilder (H.R.1754).
Last year, House Republicans correctly identified FHA and the GSEs as a problem in their Pledge to America:
End Government Control of Fannie Mae and Freddie Mac
Since taking over Fannie Mae and Freddie Mac, the mortgage companies that triggered the financial meltdown by giving too many high risk loans to people who couldn’t afford them, taxpayers were billed more than $145 billion to save the two companies. We will reform Fannie Mae and Freddie Mac by ending their government takeover, shrinking their portfolios, and establishing minimum capital standards. This will save taxpayers as much as $30 billion. (Pg 22)
The loan limit increase approved by the Senate goes the opposite direction. It gives the GSEs, and by extension the federal government, an even greater role in our nation’s struggling housing market and further exposes taxpayers. In the Pledge, House Republicans were unambiguously hostile to the taxpayer-backed boondoggles that are the GSEs, going as far to put them on par with the much-repudiated Troubled Asset Relief Program (TARP).
According to reports, a group of bipartisan, bicameral negotiators is identifying the differences between the House- and Senate-passed bills. Even though it is bad policy and lacks Republican support – especially support from those who are the most intimately involved with the policy – the loan limit increase may very well find its way into the final minibus-spending bill.
In their Pledge, House Republicans said they would “fight to ensure transparency and accountability in Congress and throughout government.” At best, it would be opaque to add the loan limit increase to the final minibus without a thorough vetting by the House. At worst, it is the height of hypocrisy to add counterproductive policy into a bill behind closed doors at the behest of one of The Bigs.
House Republicans, and their leaders, have a choice to make. If they do not trust the private market to set the terms for large loans, they can continue the corrupt nexus that exists between the Washington Establishment and Big Housing. If, however, they believe the private market can and should establish conditions for jumbo loans, they can live up to their Pledge and begin winding down the federal government’s role in the housing sector and thus “end[ing] taxpayer support.”
For conservatives, the choice is clear. It is long past time to end the bailouts.