New bond issues and credit lines — all to back more “social policy” mortgages for people who can’t afford them — were announced yesterday by the U.S. departments of Treasury and Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA). Some of the new money will be in the form of state funds and credit lines through Freddie Mac and Fannie Mae, to help “low and middle income borrowers purchase or rent homes,” according to the HUD announcement.
The federal government acts as a backstop to support the loans in this new scheme.
Once again, Democrats are placing the American taxpayer on the hook for more risky home loans to people who may not be able to afford them — which was at the very heart of the housing bubble collapse that sent the economy reeling one year ago.
Rep. Jeb Hensarling (R-Texas), the top Republican on the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, issued strong warnings yesterday in opposition to this new mortgage subsidy scheme.
“Forcing Fannie and Freddie to underwrite mortgages based on social policy goals, not the safety and soundness of the mortgage, was one of the major causes of last-year’s financial meltdown,” Hensarling said. “Now the Obama Administration is dragging the taxpayers deeper into that quagmire.”
“According to a study by Peter J. Wallison reported in the Wall Street Journal, when Fannie and Freddie were finally taken over by the government in 2008, more than 10 million subprime and other weak loans were either on their books or were in mortgage-backed securities they had guaranteed,” Hensarling continued.
“An additional 4.5 million were guaranteed by the FHA and sold through Ginnie Mae before 2008, and a further 2.5 million loans were made under the rubric of the Community Reinvestment Act (CRA), which required insured banks to provide mortgage credit to home buyers who were at or below 80% of median income. Thus, almost two-thirds of all the bad mortgages in our financial system, many of which are now defaulting at unprecedented rates, were bought by government agencies or required by government regulations.”
“As I noted in my dissent to the October [Congressional Oversight Panel] report (pdf) , there is no uniform solution for the problem of foreclosures, a sensible approach should encourage multiple mitigation programs that do not amplify taxpayer risk or require government mandates,” Hensarling said. “Subsidized loan refinancing and modification programs may provide relief for a select group of homeowners, but they work against the majority who shoulder the tax burden and make mortgage payments on time, and such a program may contribute to another housing bubble.”
“With 1 in 4 mortgages in Florida in arrears or in foreclosure and many homeowners across the country underwater — owing more than their home is worth — there is no amount of money taxpayers can reasonably be expected to contribute that will keep every problem mortgage out of foreclosure,” Hensarling concluded. “The best insurance policy to protect homeowners from foreclosure is having a job, and the best assurance of job security is the engine of economic growth and the adoption of public policy that encourages and rewards capital formation and entrepreneurial success.”
A Wildly Successful Depression?
On September 24, Vice President Joe Biden told the Wall Street Journal that the Democrats’ trillion-dollar stimulus spending bill was so successful that it wildly exceeded his expectations.
“In my wildest dreams, I never thought it would work this well,” Biden said.
Over the next three weeks the vice president reversed field and began a progressive succession of dismal reports on the economy, yesterday finally resorting to the “D” word.
“Well, it’s a depression — it’s a depression for millions of Americans, through no fault of their own,” Biden told ABC News.
The report noted that just two weeks ago, Biden said that he calls the current state of the economy “the great recession” because it’s “the single worst economic circumstance” the United States has been in, “short of a depression.”
And on Oct. 2, Biden said that “fears of a depression have been replaced by forecasts of recovery.” On Sept. 3 Biden said that “instead of talking about the beginning of a depression, we’re talking about the end of a recession eight months after taking office.”
How’s that trillion-dollar stimulus working, Joe?
Rasmussen Reports: Dismal Approval Numbers for Obamacare
The Obamacare legislation is now in the hands of Senate Majority Leader Harry Reid (D-Nev.) as he colludes (collides?) behind closed doors with the White House advisors and House leadership. And while the House version of Obamacare remains in the budget reconciliation process (to enable it to pass the Senate with only 51 votes) the Washington Post today reports that a majority of Americans now favor the “public option” government-run insurance plan the House insists upon.
Not so fast, Posties. Rasmussen reports their latest survey of 1,000 likely voters shows only 42 percent support the plan proposed by the president and Congressional Democrats. This is down two points from last week and down four from two weeks ago. A consistent 54 percent of likely voters oppose the plan.
Seniors oppose the Democrats’ proposed government health care takeover by a whopping 59-31 percent.
Dismal Polls for Sen. Harry Reid
The last four polls from Sen. Reid’s re-election bid show him losing to Republican challenger Danny Tarkanian. Reid continues his efforts to shove government health care down the throats of an unwilling public.
If he goes through with the reconciliation measure — to pass the bill on a simple majority vote — “Obamacare” may be known as “Harrycare” at least in Nevada.
The latest poll from the Las Vegas Review Journal on October 11 shows Tarkanian at 49 percent, Reid at 43 percent with eight percent undecided.
The rolling average of all of the public polls on the race is available from RealClearPolitics.com here.
The rolling average shows Tarkanian at 48 percent and Reid 40 percent — pathetic numbers for an incumbent.
Four Days of Double-Digit Negatives for the President
The Rasmussen Daily Tracking Poll yesterday marked the fourth day in a row of a double digit negative numbers for President Obama. Only 30 percent of voters strongly approve of the president’s performance in office while 40 percent strongly disapprove placing the president’s approval index at -10. The Presidential Approval Index is calculated by subtracting the number of voters who strongly disapprove of the president’s performance from the number who strongly approve.
Overall, 49 percent of voters approve of the president in some manner while 50 percent disapprove.
House of Representatives Returns Today
The House is back in session this afternoon and HUMAN EVENTS will continue to monitor the schedule at the Budget Committee for the vote to clear H.R. 3200 for budget reconciliation maneuvers that would make it possible to pass the government takeover of health care through the Senate with only 51 votes.
Once this health care horror bill passes the House Budget Committee (expected this week on a straight party-line vote) it moves straight to Speaker Pelosi’s office where all three House versions will be merged in collusion with the White House. A House floor vote could be scheduled in the next two to three weeks.
Cartoon by Brett Noel