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FSC Majority | Week in Review
Posted by Staff on January 30, 2015
Washington ‘Rolling the Dice’ Again on Risky Housing Schemes

At a hearing on Tuesday, members of the committee voiced their strong concerns to the Director of the Federal Housing Finance Agency regarding recent FHFA actions that could repeat the same mistakes that led to the financial crisis.

"Contrary to the fable told by the left, the root cause of the financial crisis was not deregulation but dumb regulation. Regulations and statutes that either incented or mandated financial institutions to loan money to people to buy homes they ultimately could not afford to keep. Exhibit one, Fannie and Freddie’s affordable housing goals. 70 percent of all troubled mortgages were backstopped by Fannie, Freddie and other federal agencies," said Chairman Jeb Hensarling (R-TX).

"Regrettably, Washington appears to be rolling the dice yet again. Within the last 12 months FHFA has announced three different policies that are harmful to transitioning us to a sustainable housing finance system that protects both homeowners and taxpayers," added Chairman Hensarling.

Housing and Insurance Subcommittee Chairman Blaine Luetkemeyer (R-MO) noted, "At today’s hearing, FHFA Director Mel Watt agreed that there are certain tenants of responsible lending; Fannie Mae and Freddie Mac do not adhere to those tenants, and that could ultimately leave taxpayers in the position of once again footing a massive bailout. Director Watt confirmed today that taxpayers are backing Fannie Mae and Freddie Mac and will continue to be on the hook until housing finance reform is enacted. It is unfathomable that Director Watt thinks it is acceptable to take no action to protect taxpayers, particularly given that our nation is just a few years removed from a financial crisis that saw record numbers of foreclosures and the largest taxpayer funded bailout in history."

Rep. Mia Love (R-UT) said, "As I witnessed as a mayor, I have actually seen how these heavily involved government policies have actually hurt many cities in their ability to thrive and to grow. We have watched homes being built and actually seen those homes a year later completely empty, and hardworking families lose their credit and their ability to get into a home.”

MEMBER SPOTLIGHT

Rep. Blaine Luetkemeyer | Luetkemeyer leads effort to end Operation Choke Point

“We’re very pleased they’ve acknowledged their wrongdoing and they’ve accepted our suggestions to put in place measures to stop this activity,” Rep. Blaine Luetkemeyer, R-Mo., told The Daily Signal in a phone call this morning. Luetkemeyer, a member of the House Financial Services Committee and leader in the fight to end Operation Choke Point, met with FDIC Chairman Martin Gruenbery and Vice Chairman Thomas Hoenig earlier today as a follow-up to concerns voiced last November.

Weekend Must Reads


Investor's Business Daily | Free Spending In Washington In A Time Of Frugality

Given half-trillion-dollar deficits, this is supposed to be an era of belt-tightening for governmental agencies. But you wouldn't know it from the fat-and-happy spending by some of them. Fannie Mae and the Consumer Financial Protection Bureau, for example, have both announced they're moving on up into glitzy new downtown Washington, D.C., office buildings costing taxpayers hundreds of millions.

McClatchy | Federal debt will explode over next 10 years, CBO says

The improving deficit numbers are temporary. Budget deficits are projected to begin going up again in 2018, and to nearly double by 2024 as retiring baby boomers strain the health and retirement systems, the economy grows more slowly and interest on the nation’s outstanding debt rises.

Real Clear Policy | The Crushing Burden of Government Regulation

Three years ago, Democrats and Republicans joined together to enact the Jumpstart Our Business Startups (JOBS) Act to reform U.S. securities law and make it easier for small businesses to raise capital. That law was a good start, but more needs to be done. So, Rep. Patrick McHenry (R., N.C.) is building support for a JOBS Act II, whose passage should be a no brainer for legislators of both parties.

    On the Horizon 

February 4, 2015 10:00 a.m.
Oversight and Investigations Subcommittee Hearing

"Exploring Alleged Ethical and Legal Violations at the U.S. Department of Housing and Urban Development"

  In the News

Wall Street Journal | Hensarling’s Housing History Lesson

Bloomberg | Bipartisan Support for Dodd-Frank Changes: Neugebauer

Wall Street Journal | Fannie, Freddie Regulator Defends Actions

Wall Street Journal | FDIC: Examiners Must Give Banks Written Notice on Risky Accounts

American Banker | FSOC's Proposed SIFI Reforms Are 'Too Little, Too Late': Critics

Washington Post | Mr. Obama’s economic optimism ignores the ongoing battle with federal debt

Reuters | U.S. housing regulator signals guarantee fee decision this quarter

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