Why Fan and Fred are SOOOO Screwed Up
Congress won’t do the simplest things to keep these quasi-government corporations under control.
The new bill doesn’t please anyone right now:
Plan to Rein in Mortgage Giants Entangled
WASHINGTON (AP) — A plan for tighter supervision of mortgage giants Fannie Mae and Freddie Mac became entangled in a political dispute in the House Wednesday over whether money to house low-income people and hurricane victims can go to community groups that engage in nonpartisan get-out-the-vote drives.
The White House opposes the legislation on a broader issue: that it would not force the mortgage companies to reduce their huge holdings. The two government-sponsored companies together finance more than three-quarters of the home mortgages in the country, and both have recently had accounting scandals.
As the bill headed toward a vote, the fight in the Republican-controlled House was over restrictions on a special low-income housing fund to be financed by Fannie Mae and Freddie Mac.
The restrictions would prohibit nonprofit community groups from receiving any of the housing money if they have used their own funds for nonpartisan voter registration or get-out-the-vote drives, or, in some cases, lobbying in the last year.
An array of civil rights organizations, unions and faith-based groups, including the NAACP, the U.S. Conference of Catholic Bishops and the American Jewish Committee, joined House Democrats in protesting the proposed ban. They are portraying it as an initial effort by conservatives that, if successful, could be widened to bar such community groups from receiving any money from any federal program in the future.
We should be so lucky.
The legislation also calls for the companies to devote a small percentage of their annual profits — which could amount to hundreds of millions of dollars — to financing housing for low-income people, with housing for victims of Hurricane Katrina given priority.
The Bush administration opposes the bill because it does not match a Senate measure that would order the two companies to reduce their mortgage investment holdings, worth a combined $1.5 trillion. Federal Reserve Chairman Alan Greenspan has said their holdings must be diminished because their huge debt — some $2.5 trillion total — poses a potential danger to the U.S. financial system.
The House bill “fails to include key elements that are essential to protect the safety and soundness of the housing finance system and the broader financial system at large,” the White House said in a statement issued Wednesday. “Given the size and importance of (Fannie Mae and Freddie Mac), Congress must ensure that their large mortgage portfolios do not place the U.S. financial system at risk.”
Why should ANY “community groups” get “low-income housing” money, let alone those that also conduct get-out-the-vote campaigns?
And why, if passed in its current form, is it not going to do what is clearly necessary (discussed previously), namely to cut Fan and Fred down to size?
