Heritage
Foundation
Caution:
Senators at Work
Amy
Payne
May
2, 2014
Obamacare
is wreaking havoc on the economy; entitlement spending is swallowing
the federal budget; America’s military readiness is in shambles;
and a handful of senators are working hard to make sure the
government stays in the housing finance business.
Priorities,
right?
Fannie
Mae and Freddie Mac, the giant government-sponsored entities (GSEs)
that dominate the American housing market, were supposed to help
people get homes and stabilize the market. They have failed at these
goals. Now, some members of Congress are claiming they want to reform
the system—but they’re basically just trying to rename it.
Johnson
Crapo housing cartoon Fannie Freddie
Right
now, Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) are trying
to gain a few more votes to propel their not-really-reforming bill to
the Senate floor.
Heritage
experts Norbert Michel and John Ligon have analyzed this and other
Senate proposals, and they warn that these “bills would not help
people buy homes; they would only protect investors and special
interests at taxpayers’ expense.”
Meanwhile,
the politicking behind the scenes is fierce. Sen. Sherrod Brown
(D-Ohio) told The New York Times that his fellow senators had better
steer clear of one man: “If they’re thinking of Jeb Hensarling
and his no-government role while we negotiate this, nothing happens.”
A
“no-government role”? Sounds like a great idea. Naturally, Senate
liberals aren’t too interested.
Rep.
Jeb Hensarling (R-Texas) is sponsoring the PATH Act, a very different
approach in the House that would get the government out of housing
finance. He calls the current system of government intrusion in the
housing market “unsustainable, unconscionable, and unfair.”
Hensarling
told The Foundry that it doesn’t make sense to continue
government-sponsored entities like Fannie Mae and Freddie Mac—which
“represent the single largest bailout in America’s history,
almost $200 billion coming out of the pockets of working men and
women in America.”
It’s
uncertain whether the Johnson-Crapo proposal will make it to the
Senate floor for a full vote this year; committee votes in the next
week or so could determine its fate. But when it comes to housing
finance, this is one area where the government needs to get out and
move on.
Heritage
experts have concluded:
The
federal housing policies related to the GSEs have proved costly not
only to the federal taxpayer, but also to financial markets and the
overall economy. It is time federal policymakers accept that this
institutional model has failed and that they should move toward a
U.S. mortgage market without Fannie Mae and Freddie Mac.
After
all, we can think of a few other things our senators could do.
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