Another Obama Head Fake On Fannie, Freddie Reform
Posted 06:45 PM ET
Big Government:
President Obama is renewing calls to reform Fannie Mae and Freddie Mac.
But it's just another ruse to prevent these costly government failures
from being privatized.
While outlining his plan Tuesday in a housing speech in Phoenix, Obama proved he's the master of talking out of both sides of his mouth.
In one breath, he encouraged the private market to take a bigger role in home lending, and even suggested the government's role should be limited.
Yet in the next, he argued the government still plays a vital role in the mortgage market by guaranteeing "affordable housing" for lower-income Americans.
Then he talked about how he wants to "strengthen" the Federal Housing Administration, by which he means expand its role in the affordable housing market. FHA has already picked up the subprime slack from Fannie and Freddie on his watch.
Now Obama seeks to further expose it to risky subprime loans by qualifying deadbeat borrowers with foreclosures and bankruptcies. Obama also prattled on about personal "responsibility," and making sure those who want a home can actually afford one.
Yet instead of making deadbeat borrowers wait three years to apply for another home loan, Obama is ordering FHA to back such high-risk loans right now, as long as the borrowers have a job and take credit counseling.
He also linked housing reform to immigration reform, arguing that immigration can stimulate the housing market. But in the run-up to the crisis, thanks to government pressure on Fannie and Freddie, millions of Hispanic immigrants — many here illegally — took out home loans with no down payments and weak or no established credit, and defaulted on those loans in droves.
We've heard this from Obama before. In February 2011 he put forth a plan to "reform" Fannie and Freddie. Then as now, he vowed to wind down the toxic twins in favor of a private market solution — with a big caveat.
"Any such changes should occur at a measured pace," the president said in his 30-page report to Congress, "that preserves widespread access to affordable mortgages." He also asserted: "The government still has an important role to play in housing finance."
Two-and-a-half years later, he's still dragging his feet.
Despite prespeech headlines trumpeting "an end to Fannie and Freddie," Obama did no such thing.
Indeed, he offered no specifics about how he would actually unwind the nationalized mortgage giants — which so far have cost taxpayers $190 billion in bailouts, thanks largely to federal affordable-housing mandates that drove them into the subprime market.
If Obama truly were serious about reforming housing finance, he wouldn't have tapped Democratic Rep. Mel Watt to be the nation's top housing finance regulator.
Watt teamed with Democratic Rep. Barney Frank to pressure Fannie and Freddie to underwrite high-risk loans to satisfy their affordable-housing social agenda.
Obama in his speech says he wants to lay a "rock-solid foundation" in home lending to prevent another crisis. But he really only cares about "affordable housing" and carrying out his social agenda.
While outlining his plan Tuesday in a housing speech in Phoenix, Obama proved he's the master of talking out of both sides of his mouth.
In one breath, he encouraged the private market to take a bigger role in home lending, and even suggested the government's role should be limited.
Yet in the next, he argued the government still plays a vital role in the mortgage market by guaranteeing "affordable housing" for lower-income Americans.
Then he talked about how he wants to "strengthen" the Federal Housing Administration, by which he means expand its role in the affordable housing market. FHA has already picked up the subprime slack from Fannie and Freddie on his watch.
Now Obama seeks to further expose it to risky subprime loans by qualifying deadbeat borrowers with foreclosures and bankruptcies. Obama also prattled on about personal "responsibility," and making sure those who want a home can actually afford one.
Yet instead of making deadbeat borrowers wait three years to apply for another home loan, Obama is ordering FHA to back such high-risk loans right now, as long as the borrowers have a job and take credit counseling.
He also linked housing reform to immigration reform, arguing that immigration can stimulate the housing market. But in the run-up to the crisis, thanks to government pressure on Fannie and Freddie, millions of Hispanic immigrants — many here illegally — took out home loans with no down payments and weak or no established credit, and defaulted on those loans in droves.
We've heard this from Obama before. In February 2011 he put forth a plan to "reform" Fannie and Freddie. Then as now, he vowed to wind down the toxic twins in favor of a private market solution — with a big caveat.
"Any such changes should occur at a measured pace," the president said in his 30-page report to Congress, "that preserves widespread access to affordable mortgages." He also asserted: "The government still has an important role to play in housing finance."
Two-and-a-half years later, he's still dragging his feet.
Despite prespeech headlines trumpeting "an end to Fannie and Freddie," Obama did no such thing.
Indeed, he offered no specifics about how he would actually unwind the nationalized mortgage giants — which so far have cost taxpayers $190 billion in bailouts, thanks largely to federal affordable-housing mandates that drove them into the subprime market.
If Obama truly were serious about reforming housing finance, he wouldn't have tapped Democratic Rep. Mel Watt to be the nation's top housing finance regulator.
Watt teamed with Democratic Rep. Barney Frank to pressure Fannie and Freddie to underwrite high-risk loans to satisfy their affordable-housing social agenda.
Obama in his speech says he wants to lay a "rock-solid foundation" in home lending to prevent another crisis. But he really only cares about "affordable housing" and carrying out his social agenda.
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