A housing bill was recently introduced in the Senate with bi-partisan support. Sponsors claim the bill will get rid of Fannie Mae and Freddie Mac and eliminate taxpayer exposure to losses in the housing markets. Not so says Ed Pinto, housing policy expert and resident fellow at the American Enterprise Institute, in the article below published by The Hill. I believe you will find Ed’s article insightful and informative.
The draft bill released on Sunday, March 16 by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho) will not protect taxpayers from future bailouts.
- It will replace the implicit federal guarantees enjoyed by Fannie and Freddie with explicit guarantees enjoyed by their successors.
- It will replace the single-family affordable housing mandates with a new set of affordable housing provisions that will also lead to debased underwriting standards.
- It will raise taxes on the middle class by imposing a new tax on homeownership that will be used to provide billions annually in furtherance of a misguided policy to promote risky lending to lower income homebuyers.
Experience has shown that any bill which includes an explicit guarantee of an insurance program will fail to protect taxpayers. The proposed Federal Mortgage Insurance Corporation (FMIC) will be no different.Posted: Mar 27, 2014