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In the face of extensive testimony, lobbying and campaign contributions, Congress, fearful of bad publicity over “insensitivity,” has preferred to intimidate Fannie Mae and Freddie Mac into boosting the nation’s homeownership rate. That rate rose from 64.2 percent in 1990 (where it had been “stuck” for some time) to about 69 percent in 2006. But there’s a downside to this “success,” as manifest in all those “Foreclosed” signs popping up on front lawns around the country.
SINCE FANNIE MAE and Freddie Mac are “too big to fail,” they know government will ride to the rescue. And that is precisely what has happened. The House of Representatives on July 23 passed by a 272-152 margin a “stabilization” plan that serves as a virtual candy store for Fannie Mae, Freddie Mac and the rest of the lending industry. The Senate three days later approved the measure by 72-13. Then, in the early morning hours of Wednesday, July 30, and with very little fanfare, President Bush signed the bill into law.
The law temporarily raises the Treasury Department’s line of credit to Fannie Mae and Freddie Mac from $2.25 billion to an unlimited amount (the Bush administration was the prime mover behind this one). It gives the Federal Housing Administration (FHA) special three-year authority to refinance up to $300 billion worth of mortgages and prevent about 400,000 evictions.
Worse, the law raises the Fannie Mae/Freddie Mac loan purchase limit from $417,000 to $625,000 and creates a new “affordable housing” fund to be drawn from Fannie Mae and Freddie Mac profits. It provides $3.9 billion in grants to state and local governments to buy and repair foreclosed property, which is likely to lead to more eminent domain abuse. It provides $4.6 billion in tax credits for first-time homebuyers.
It also raises the federal debt limit from $9.8 trillion to $10.6 trillion and creates a new regulator to replace OFHEO, which would work closely with the Federal Reserve System.
The Congressional Budget Office has estimated the total cost of the package at $25 billion. Continuing declines in house prices, however, could lead to far more foreclosures and another bailout.
Rep. John Boehner, R-Ohio, and Sen. Jim Bunning, R-Ky., men of common sense, have been publicly critical of the legislation. “We must take responsible steps to ensure our financial and housing markets are sound, but the Democrats’ bill represents a multi-billion-dollar bailout for scam artists and speculative lenders at the expense of American taxpayers,” Boehner remarked after House passage.
Such words, unfortunately, did not win the day.
Speaking of scam artists, radical nonprofit organizations practically are salivating. Not only does the measure prop up Fannie Mae and Freddie Mac, it assures nonprofit progressive groups a large chunk of the $230 million that would go for “counseling.”
This, in essence, is how political leveraging works. A little bit goes a long way — and the wrong way.
Carl F. Horowitz is director of the Organized Labor Accountability Project at National Legal and Policy Center, a Falls Church, Va.-based nonprofit organization dedicated to promoting ethics in American public life. He is a former professor of urban and regional planning at Virginia Tech.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?
H/T to National Review Online