Today the Senate is scheduled to vote on the housing bailout bill that has been circulating on Capitol Hill for so long its title today is simply “a bill to provide needed housing reform and for other purposes.” When a bill’s title includes the phrase “and for other purposes,” you know the American taxpayer is about to get a raw deal. This bill is such terrible public policy in so many different ways that it’s hard to pick which one is the worst. But we’ll try.
- Bails out the banks most responsible for the current crisis. The most important thing to remember about this “housing reform” bill is that checks for the mortgage bailout go directly to the banks that irresponsibly lent money to risky borrowers. That’s why Countrywide Financial and Bank of America have pushed so hard for this program. And since it is a voluntary program, the banks get to choose which loans they’ll pawn off on the taxpayer. As a result, banks will keep the loans that have the best chance of being paid back, while the Federal Housing Authority (FHA) is forced to guarantee the riskiest borrowers.
- Increases the risk of an even bigger taxpayer-funded bailout. Between 2000 and 2007, the FHA increased its portfolio of no-down-payment loans from 2 percent to 37 percent. These loans default at almost three times the rate of other loans. As we explained above, all of the $300 billion in loans the bill intends the FHA to take on will be preselected by banks as those with even higher default rates. The FHA posted losses of $4.6 billion last year. FHA’s losses, paid for by taxpayers, will skyrocket if this bailout passes.
- Creates a special-interest slush fund. Partisan leftist groups such as the Association of Community Organizations for Reform Now (ACORN) have pushed for a federally funded National Housing Trust Fund for almost a decade now. During the brief economic downturn in 2001, ACORN advocated the fund as an economic stimulus. From 2003 through 2006 it promoted the fund as a solution to housing prices that were too high. Now ACORN argues it’s needed because housing prices are too low. A National Housing Trust Fund will make it easier for the left to funnel millions in taxpayer dollars down the drain of ACORN’s well-established history of fraud, deceit and intimidation.
- Creates a national fingerprint registry. In the name of combating mortgage fraud, the bill sets up licensing and oversight standards for residential mortgage originators. One standard, John Berlau of the Competitive Enterprise Institute says, may “require thousands of individuals working even tangentially in the mortgage and real estate industries — and not suspected of anything — to send their prints to the feds.”
- Does nothing to actually help the economy. When House Financial Services Chairman Barney Frank (D-Mass.) launched his FHA scheme, he told The Hill newspaper it was “irrelevant” how many homeowners would be helped. The Congressional Budget Office estimates the latest version of the bill would aid only 500,000 households over the next four years. Another CBO study, of the Dodd plan, concluded “the plan would not be sweeping enough to restore the housing market or ailing economy.”
The bill does have one saving grace: It does contain much needed reform for Freddie Mac and Fannie Mae. The near-monopoly power these government-sponsored entities have in the mortgage industry was a key cause of the housing bubble. But conservatives shouldn’t let Freddie and Fannie’s needed reform of be held hostage. They deserve their own standalone bill.
Quick Hits:
- After success in Basra, Mosul, Sadr City and now Amarah, the Iraqi army has “brought a degree of peace to once-violent cities and significantly strengthened [Prime Minister Nouri] al-Maliki’s government.”
- After telling the military how to detain enemy combatants last week, the Supreme Court announced it will hear a case on sonar and dolphins that will enable the court to tell the Navy how best to train.
- Al-Qaeda’s in-house propaganda studio, as-Sahab, released 97 online videos last year, a sixfold increase from 2005.
- Zimbabwe’s opposition leader was forced to hide in the Dutch Embassy after strongman Robert Mugabe’s forces raided his home.
- The San Francisco Bay Area rejected a proposal for yet another power plant, this time a 115-megawatt natural gas-fired plant in Hayward.
American taxpayers should not bail out the mortgage companies. They have mortgage insurance to help pay for defaulted loans. The people are suffering from the escalating fuel and food prices due to the ineptitude of our elected representatives. We need to look at the lobbyists who are paying them to see where their real interests lie; it is not with the people they are supposed to be representing!
As an American taxpayer, I feel this is totally unreasonable. Why should the American taxpayers (many of whom try to handle their finances responsibly), have to bail out the mortgage companies?
So, you can send this information out to thousands of folks and hope it gets them mad enough to call or send an email to their representative. Been there — done that. What has it gotten me? I am helpless. I guess I'll just have to relax and enjoy what is inevitable. My government at its finest (NOTE: I am shaking my head back and forth).
I would like a link to the leaders that need to hear from us.
Would it be possible to provide that info in the future?
Great job, we need this type of information to be well informed Americans.
The sorry lot that has served (if you will forgive a complete misuse of the word) for the last 20 years has squandered its moral capital and has devastated the spirit of those of us in the grass roots. I fear that we will be better off in the long run, if we do survive, by surviving a period in the wilderness. I cannot support John McCain and the morons, who run his campaign. Anyone who actively furthers the global warming scam, the most serious financial fraud in the history of mankind, simply cannot be trusted. I will do what I can for true conservative congressional candidates; however, McCain will be on his own. Our only hope is to work desperately for a strong filibuster slate.
A write in vote for Ron Paul……would get the message out that 'we are mad as Hell and not going to take in anymore."
Otherwise, we are simply voting for a different side of the SAME coin! Been there done that… and am not going to do it anymore~ Voting for the lesser of two evils….still leaves you with evil, right?!
Bailing out the mortgage companies is just another way for the rich to get richer while the poor get poorer. That is really why this evil, rotten and corrupt United States Federal Government is absoltuley disfunctional.
Yet again, our elected representatives are doing nothing more than represent their own interests and those of their cronies. Our current day so-called Conservatives are nothing of the kind. This is irresponsible fiscal policy and rewards the very people responsible for the economic donwturn. Whatever happeded to individual accountability for ones actions and and decisions? I shouldn't have to bail out those who lived beyond their financial means!!
I don't understand why the banks didn't work with the homeowners to find a middle ground. It seems like it would be better for the bank for the families to be in their homes paying the mortgage (at a lower interest rate) than to forclose, not be getting a mortgage payment, have to pay legal fees, and have the house sitting vacant until they can sell it for a fraction of what it's worth. It seems like a no brainer to me.
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