Mehrens: Inside Washington DC’s “Housing Reform” Effort

NEXT BAILOUT ALREADY WRITTEN INTO LAW By Nathan Mehrens  ||  Earlier this month the U.S. Senate Banking Committee passed the so-called “Housing Finance Reform and Taxpayer Protection Act of 2013” by a bipartisan 13-9 vote. This cheerily christened piece of legislation purports to inject market reforms into the mortgage industry…


By Nathan Mehrens  ||  Earlier this month the U.S. Senate Banking Committee passed the so-called “Housing Finance Reform and Taxpayer Protection Act of 2013” by a bipartisan 13-9 vote. This cheerily christened piece of legislation purports to inject market reforms into the mortgage industry – while “re-privatizing” government-owned lending behemoths Fannie Mae and Freddie Mac (whose recent bailouts cost taxpayers an estimated $317 billion).

Proponents argue that the bill is a model of how the federal government can manage the major challenges in our economy, and point to it as the framework for how the housing finance system should look.

What supporters neglect to mention is taxpayers remain very much on the hook for public losses under this new proposed housing finance framework. In fact their legislation foolishly pledges the “full faith and credit of the United States” in the event a new government-run mortgage insurance fund goes belly up due to a worsening economy (or ravenous politicians).

In other words Congress doesn’t have to approve the next housing bailout – it’s already written into the law.
Additionally there’s a new fee subsidizing this insurance fund, which lending institutions will no doubt pass onto borrowers (including the 32.6 million Americans who either paid 20 percent down on their homes or whose loan-to-value rate is less than 80 percent). And to what end? So government can continue backing risky loans for people who shouldn’t be buying a home in the first place?

That isn’t taxpayer protection – and it certainly isn’t permitting the marketplace to work. In fact it’s more of the same command economic nonsense that landed us in this mess in the first place.

(To continue reading this piece, press the “Read More …” icon below).

Nathan Mehrens is president of Americans for Limited Government. His piece, reprinted with permission, originally appeared on NetRightDaily.com.

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GrandTango May 26, 2014 at 9:53 am

What policy wonks do not get: Democrats originate, support and perpetuate BAD legislation…

Can they talk some wayward Republicans into voting for it, based on alleged public support and media coercion???…Yes.

Until you Get your MOTHER-F*#king Brain/Dead Head from up outta your Stupid @$$…and start Ravaging the F*#k out of these democrats…you can bitch, moan and circle-jerk with FITS for the rest of your life…

Democrats, mostly all by themselves, have F*#ked up your, and my, country…

Hemming and hawing, talking about Bi-Partisan responsibility may make you feel all Diverse and effeminate inside…But unril grow the guts to say WHAT IT IS…your F*#king opinion is about as good as Chris Mathews, Hillary Clinton’s, FITS and John Edwards…

I’ll make it simple for you…since America seems to be simple-minded in national elections…

Democrats are Failure…learn that and live it…or just STFU…nothing else matters….

Feeling The Spirit May 26, 2014 at 1:30 pm

Can’t wait for that Pole Smoking son of a Beech Santorum to become Our next Fucking President of The Fucktard United States, goddamnit! These pussy ass Liberal- fucking Tarians have done too Much harm to my Flaciad Dick with all these whores (see Limbaugh) hating men. with Women being LIBERALIZED by (you guessed it) Liberalism!!
Hitler would be so proud. Why don’t you admit who andWhat you are??

The wages of sin is DEATH! DEATH, I’m telling you Dumbass Shits! FITS and the rest of you Lock-Step racist Dims will lose because Good and God always win over aborted babies (I want Rush’s Love Child, don’t you?) that can’t fend for themselves monkeys out your ass Libtards. Eat shellfish but stop sucking that weiner, son…

GrandTango May 26, 2014 at 2:03 pm

An ignorant imitator just makes me look so much more brilliant… I thank you for demonstrating that….

Jonestown Kool-Aid® May 26, 2014 at 3:12 pm

I see Biggie’s still taking the piss. Keep up the good work, fellows.

Deo Vindice SC May 26, 2014 at 8:17 pm

Rebublicans are no more, KOCH boys are they !

Smirks May 27, 2014 at 9:19 am

As brilliant as a burnt out nightlight, perhaps.

Richard Thompson May 26, 2014 at 2:50 pm

I agree. The current senate banking committee bill was written for Bob Corker by a Countrywide Financial executive named Michael Bright. Fannie and Freddie currently back 60% of the secondary mortgage market in the United States and the Federal Mortgage Insurance Company proposal increases systemic risk to tax payers to 90%. They changed the name of the bill from Corker-Warner to Johnson-Crapo because Mark Warner realized his bill eliminated 7,000 Virginia jobs at Freddie Mac in an election year… oooops!

The federal takeover of Fannie Mae and Freddie Mac amounts to nothing more than Grand Theft Treasury and their continued conservatorship is illegal. Tell me, how does a 116 billion dollar bailout work when a company has 883 billion in assets? Look at Fannie’s balance sheet at the end of 2007.

The Financial Crisis Inquiry Commission, Government Accountability Office, Harvard Joint Center for Housing Studies, and the Federal Housing Finance Agency concluded that Fannie and Freddie were not the main cause of the financial crisis. It was private banks like Countrywide that were responsible for the mess. Federal Reserve Board data show that more than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent. They saw what was coming and acted responsibly. Why would anyone want to give this market back to the private sector after what happened in 2008? Both the house and senate proposals are furthermore a slap in the face to property rights in the United States. There are 7,000 shareholders of Fannie Mae and 2,000 shareholders of Freddie Mac. This is a constitutional issue with regards to the fifth amendment.

This is an issue that both Democrates and Republicans have fumbled. I am only interested in not having a disaster like 2008 happen again. Don’t let a Congress with a 13% approval rate make radical changes to an industry that supports 20% of our economy.

Rocky Realtor May 27, 2014 at 10:09 am

There will be no reform. FNMA / FHLMC loans make up actually nearly 80% of all loans today. Without them interest rates would be 7-9%. Congress has no desire to upset the apple cart – the National Realtor Association would go nuts. Also, now with FNMA and FHLMC pumping hundreds of billions into the Federal bank accounts, Congress won’t touch it. Neither Republican nor Democrat. Final.


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