A Home for Every American Family? No!
President Obama's plan for Fannie and Freddie just repeats old mistakes.
The reviled companies are the only players in the secondary mortgage market
Fannie Mae and Freddie Mac, the government-backed guarantors of residential mortgages, hold a particularly reviled place in our political culture. They stand accused of taking a $187.5 billion government bailout (correct) and inciting the housing bubble and financial crisis (largely incorrect).
Why the next housing crisis could be worse than the last one
Unless the White House changes course, the next housing crisis will be worse than the last one
Any taxonomy of first friends includes a few familiar types. There’s the amiable glad-hander destined for the outer Cabinet, like George W. Bush crony Don Evans. There’s the scheming, scandal-prone loyalist, like the Clinton hanger-on Harry Thomason, of Travelgate infamy. And then there’s the discreet consigliere who serves alternatively as fixer, sounding board, chief surrogate, and all-around defender of the faith. Personal friends with such outsize influence are actually quite rare in presidential politics. Within recent administrations, only Valerie Jarrett really fits the profile.
In the wake of the economic chaos brought on by the 2008 financial crisis, there have been widespread demands for accountability. And just last month, the Securities and Exchange Commission (SEC) declared that it had taken a bold step to hold certain individuals involved in the meltdown responsible for their actions. On Friday, December 16, the SEC charged six former executives of Fannie Mae and Freddie Mac with securities fraud, accusing them of misleading investors by understating the extent of their exposure to risky subprime mortgage loans.
Um, anyone who actually wanted to be president and had made $1.6 million lobbying for Fannie Mae and Freddie Mac would have come up with a better defense of it by this point than Gingrich's two-pronged "government-sponsored entities do lots of good things" and "I was a national figure doing just fine so I couldn't have been a lobbyist" line of attack. Clearly it's more important to Gingrich to insist on his righteousness than to come up with a defense that might sound semi-plausible, even if it had the collateral impact of conceding he did something slightly dodgy.
Thanks to some good reporting by Bloomberg News, we now know that Newt Gingrich's consulting gig at Freddie Mac earned him not $300,000, as John Harwood’s question at the recent CNBC debate suggested, but $1.6 million.
When historians look back at this benighted moment in time, they may find themselves puzzled by how we refused to take the necessary steps to improve our economic situation. Depending on what happens in coming months, they may find that the best solutions—aggressive fiscal and monetary stimulus here in the United States, bank recapitalization and debt restructuring in the EU—were left on the table, while millions unnecessarily suffered. A footnote in that history may be the decision of Fannie Mae and Freddie Mac not to do more to help the housing market recover.
With job creation and the renewal of the moribund housing sector increasingly now at crisis levels of urgency, there seems to be a renewed push in Washington to inject new life into the Property Assessed Clean Energy Program (PACE)--a program that some had given up for dead after the Federal Housing Finance Authority created a major implementation hurdle last year. The newly introduced PACE Assessment Protection Act (H.R.