Skip to comments.WSJ: Mr. Oxley's Slush Fund - A Fannie Mae 'reform' far worse than current law.
Posted on 06/14/2005 5:24:09 AM PDT by OESY
For the list of worst Congressional legislation ever, we have a new candidate: last month's debacle in the House Financial Services Committee on Fannie Mae and Freddie Mac. In the name of reforming these "government-sponsored" mortgage giants, the Members voted to make them even more financially dangerous, while grabbing a chunk of their profits for political payola to boot.
Chairman Mike Oxley and friends voted to create a new "affordable housing fund" to the tune of $600 million or more a year. Already facing deserved criticism for being under-capitalized, Fannie and Freddie would have to dole out 5% of their after-tax income each year to an assortment of "non-profit and for-profit housing organizations, government agencies and lenders." This means passing out $3 billion and potentially much more over five years to anyone in the housing industry who is politically well connected -- say, anyone with a pal on the Financial Services Committee.
It's no surprise that Democrats favor this kind of income redistribution to Acorn and other liberal interest groups, but the key to its passage was Republicans....
They in turn were doing the bidding of the National Association of Home Builders, which wants more taxpayer largesse for what is already the most government-favored industry in the U.S. economy. A few Republicans offered an amendment to kill what they're aptly calling a "slush fund."...
The economic risk in real estate today is that many people are buying homes they won't be able to finance if mortgage rates rise. This is also one of the dangers of putting so much housing risk in two giant companies, Fannie Mae and Freddie Mac, and it is why the political grown-ups need to defeat Mr. Oxley's Potemkin reform.
(Excerpt) Read more at online.wsj.com ...
Interesting. Thanks for the excerpt.