What does a U.S. immigration program have to do with the housing market? Nothing. Yet lawmakers are once again attempting to tap mortgage-finance giants Fannie Mae and Freddie Mac to fund unrelated legislation, this time to cover the cost of increasing the number of green cards for foreign graduates with advanced degrees. Fannie and Freddie, it seems, have become Washington’s favorite piggy bank.
Some may see this as a good thing. The U.S., after all, spent $190 billion bailing out the companies, so why not siphon some of the money back to pay for other priorities? The reality is that doing so raises mortgage costs for borrowers regardless of their credit risk, threatens to stall the housing market’s comeback and lowers the odds that Washington will ever fix the two companies.
To pay for the immigration bill it passed last month, the U.S. House voted to extend for one year higher fees Fannie Mae and Freddie Mac charge lenders to guarantee the loans they make to home borrowers. Last year, Congress increased the so-called guarantee fee by 10 basis points (0.1 percent) through 2021 to fund a payroll-tax cut. The House bill extends the higher fees, which reflect a loan’s expected rate of return, through 2022. The measure isn’t going anywhere — it faces a presidential veto threat and was blocked this week by the Senate — but the temptation to tap Fannie and Freddie whenever Congress needs a ready supply of cash is likely to grow.
There’s no question guarantee fees should slowly increase. Fannie Mae and Freddie Mac don’t make mortgage loans but guarantee them by charging lenders a fee to cover projected losses from defaults. For too long, the companies underpriced risk and charged too little for the mortgages they were agreeing to back, which is one reason they were bailed out and placed under government control.
Absent a broader effort to overhaul housing finance, raising fees with no consideration to their effect on the housing market poses new risks. The guarantee fees are passed on to borrowers, typically through higher interest rates. Raising fees too quickly could hamper the housing recovery by making it more expensive to borrow. Higher fees also thwart the Federal Reserve’s attempts to stimulate the economy by keeping interest rates low…
A new Bloomberg Government report says the mortgage giants will probably escape a major overhaul in President Barack Obama’s second term because they are no longer draining taxpayer money and instead are returning funds to the Treasury. Both reported third-quarter profits, foregoing Treasury Department cash infusions.
Fannie Mae and Freddie Mac are finally healing, and Congress should resist the impulse to turn to them whenever it needs a ready supply of cash. The companies are supposed to smooth out the ebbs and flows of the mortgage market, not serve as ATMs.
This Bloomberg article politely raises questions about Republicans raiding Fannie Mae and Freddie Mac to pay for the only part of immigration House Republicans care about – imported engineers who will help high-tech corporations on the cheap. I don’t care if they learn from their mistakes about immigration policy; but, they need to be slapped when they try to steal from the public coffers.
Second to working taxpayers, the largest source of federal revenue is interest income on the Social Security funds. Certain factions in Congress are dying to loot this. No doubt it is the same factions who are drooling at the mortgage funds. All this lust hides behind a veil of ideological purity. The fact is, the Spanking Police are needed in Congress.
No, no, no, no… NOT interest on SS funds. Stealing (borrowing) from SS funds (naming depends on party affiliation). Left “hero” President Clinton funded his “balanced budget and surplus” from this abomination and pioneered its heavy usage. Translated to normal language: if Government borrows from SS funds that action is not counted as getting in debt but as real income. Instead of “we got X$ in debt” such action counts as “we got X$ of income”. Yes, 2X$ difference… Abomination does not stop there. As it is “fox biting its own tail”, this real debt has no expiration date or limits because IOU note by the Government to the Government counts as real money. At least as long as there is real money in the SS pot. Once gone, SS and Government are bankrupt.
Do you even know how SS surplusses earn interest? The money is invested in treasury bonds, which means that it is already spent. When the bonds mature, they are repaid, and then money not needed to pay benefits is re-invested, and the cycle repeats. There is no “looting” going on.
Except the Federal Government gets no interest income from Social Security funds, which don’t exist except as an accounting tool to mark how much money was earned in payroll taxes.
“Some may see this as a good thing. The U.S., after all, spent $190 billion bailing out the companies, so why not siphon some of the money back to pay for other priorities?” – this is a good thing. F’n things exist on our money, nothing else. They are no more private entities. They owe more to us than they are worth. It is time to siphon our money from these losing creations while there is still something there and kill them once and for all. More expensive credit? – more market valued credit, more proper free economy.
This is just old fashioned, pre-Obama thinking. “Piggy banks” really, like the money has to come from somewhere. Just spend the money and the Fed will cover the bill. Bookkeeping is just so yesterday.
The next thing you know someone will be calling for a budget.
“the U.S. House voted to extend for one year higher fees Fannie Mae and Freddie Mac charge lenders to guarantee the loans they make to home borrowers.”
This is the Republican controlled House pushing for this and Obama has threatened a veto if it passes. Blame him for many things, but don’t blame him for this.
How is it stealing from public coffers when there is currently no money? They are extending a current fee. Without their bill, this money would not be in government hands. Having the higher fee is good as it reduces the incentive to make high-risk loans.
Besides which, they raided student loans to pay for Obamacare, they can raid something else to go towards education.
“the only part of immigration House Republicans care about – imported engineers who will help high-tech corporations on the cheap.”
So liberals only care about importing people who will take jobs away from low-skilled workers.
I have a question of Colorado. What’s a budget???
“To pay for the immigration bill it passed last month, the U.S. House voted to extend for one year higher fees Fannie Mae and Freddie Mac charge lenders to guarantee the loans they make to home borrowers”
So let’s see: Fannie and Freddie charge higher fees which the lenders will pass on to their native-born customers. This is brilliant – the ruling elite have found another way for the native born to pay for their own displacement.
Beyond evil, IMO.
Hey, if the 1%ers and the oligarchs want to raid the Freddy and Fanny piggy bank, I say let ’em.
That’s how ‘Mericans were paying for their kid’s education anyway. (I know a few corporate lawyers who use the equity on one of their houses to pay for their kid’s degrees [in law of course {you wouldn’t want them actually working for a living.}])
So what if that gets us some poor, foreign, brown-skinned geeks with four year visas?
When they’re done we’ll send the Pakis packing back to their crappy, cratered countries, where they’re going to be glad to have gotten an education and will be willing to start companies which will make money for their foreign investors, (without being infected by ‘Merican 1%er greed and laziness.)
You didn’t want to force companies to hire locally anyway.
Hell, they might even have hired your 99%er son or daughter to do something else than earn their living flat on their backs, like the good little whores the 1%ers want them to be.