Committee Holds Hearing on FHA’s First-Ever Taxpayer Bailout on Tuesday
October 28, 2013 -
Washington’s latest taxpayer-funded bailout –$1.7 billion for the Federal Housing Administration (FHA) – will be the focus of a hearing on Tuesday at 10 a.m. by the House Financial Services Committee. FHA Commissioner Carol Galante will testify before the committee about the FHA’s first-ever bailout, which was announced on September 27 and carried out on September 30.
This will be the committee’s seventh hearing this year on the topic of the FHA and its deteriorating financial health. Members of the committee, including Chairman Jeb Hensarling (R-TX), have been warning for months that FHA is not only broke, it is “bailout broke.”
On February 14, FHA was added to the list of government programs classified by the Government Accountability Office (GAO) as “high risk” because of “their greater vulnerability to fraud, waste, abuse and mismanagement or the need for transformation.” Chairman Hensarling noted at the time of the GAO action that it “reinforces everything our committee has been saying about the FHA for some time now – it is a high risk to taxpayers, it is a high risk to the mortgage insurance market and it represents a high risk to our economy.”
When FHA announced it would require its first ever taxpayer-funded bailout, Chairman Hensarling said “hardworking American taxpayers are sick and tired of having to bail out Washington’s failed housing policies, whether it’s the nearly $200 billion bailout of Fannie Mae and Freddie Mac or a bailout of the FHA.”
To create a sustainable housing finance system, end the taxpayer bailout of Fannie Mae and Freddie Mac, and prevent future FHA bailouts, the Financial Services Committee passed the Protecting American Taxpayers and Homeowners Act (PATH Act) on July 24.