Posted on 09/10/2007 4:15:30 PM PDT by DeaconBenjamin
Democrats on Monday stepped up pressure on the Bush administration to let Fannie Mae and Freddie Mac buy more mortgages than their portfolios currently allow to forestall an “October surprise” of subprime mortgage resets.
In a letter to Ben Bernanke, chairman of the Federal Reserve, Barney Frank, chairman of the House financial services committee, criticised the administration’s reluctance to lift caps on the two government-sponsored mortgage portfolios as “a triumph of a fairly rigid ideology over the facts of the situation”.
Mr Frank’s comments came after Chuck Schumer, senator from New York, introduced a bill to temporarily lift the caps by 10 per cent.
Mr Schumer said the bill would free $145bn for the purchase of new mortgages and allow Fannie and Freddie to buy mortgages larger than the current $417,000 limit in “high-cost areas”.
George W. Bush recently unveiled measures to help the most distressed borrowers, but Democrats appear to believe there is continued political capital in attacking the administration’s strategy.
Chuck Schumer, senator from New York, introduced a bill that would temporarily lift caps on the government-sponsored entities’ mortgage portfolios by 10 per cent. He said this would free up $145bn for the purchase of new mortgages.
Fannie and Freddie’s regulator, the Office of Federal Housing Enterprise Oversight, has said federal limits on their combined $1,400bn portfolios – imposed in the wake of accounting irregularities – should remain for “safety and soundness” reasons.
Mr Bush two weeks ago let the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, guarantee loans for borrowers at risk of default to help them refinance.
However Mr Schumer said his bill was necessary “on account of the Bush administration’s refusal to tap the GSEs to play the role they were designed for”.
“This emergency measure is not only important to restore confidence in the mortgage market for current and aspiring home buyers, but it would also provide crucial and necessary financing by Fannie and Freddie to subprime foreclosure relief efforts across the country before the ‘October surprise’ of subprime resets further shocks the mortgage markets,” he said.
The subprime crisis is especially severe in the politically important electoral “swing states” of Ohio and Florida.
“Anything that appears to address the concerns of voters in these states might have far more traction than in a non-election year,” said Karen Weaver, analyst at Deutsche Bank.
“This is true regardless of whether the problems were caused by subprime, or whether these solutions will be effective. This is now the realm of politics and not of economics.”
Why is Barney Frank addressing his comments to Ben Bernanke?
Chuck Schumer, senator from New York, introduced a bill to temporarily lift the caps by 10 per cent.
Define temporary.
Wonder if the Democrats are going to look at what role their racial quotas pretending to be “Fair Lending” laws had in this debacle.
Why should I or any other taxpayer be FORCED by law to bail out fools who cannot manage their own money?
Yep, want to bail out all their constiutents in CA.
It was more about lending to illegals and flippers. And last I heard less than 1% of subprime loans were at risk of defaulting. If so, some crisis.
Little Chuckie “Proud-To-Be-A-Socialist” Schumer rides again.
Send him to Cuba please — one way.
What? this is insanity.
Now, the next order of business for Dems. is to figure out how to blame these mortgage problems on Bush.
Exactly why should I care? I saved up for years to have a down payment and mortgage I could pull off with a conventional loan.
Worked two full time jobs at one point so why should I care?
I don't!
The short answer is - they didn’t.
The related, also short answer is, certain “investment” speculators and mortgage lenders need to bathe very deeply in mortgage defaults.
What none involved require is government intervention.
Sheesh!
The criticism of Freddie and Fannie was that they needed to strengthen safeguards and governance. Disclaimer. I am invested in a Fannie Mae fund. Just raising the caps avoids the hard work of reform.
Already being done.
Amen...while the idiots were going for all the subprime variable interest rate loans, there were great conventional loans out there at 5.750 and less.
The worse thing that can happen in the current market is for government to get more involved. The last part of the mortgage loan application asks for sex/ethnicity of borrower which has nothing to do with the loan application but everything to do with government tracking. The applicant can choose to not furnish the info but the loan originator has to “guess” if not completed by the borrowers.
I didn't want assisatance from the Feds or the State.
If I decided I couldn't pull it off and I wanted a home I could always reloacte to an area where the oppertunities for financing were more attractive.
I read the rules.
Thanks for sharing.
Exactly where is the personal responsibility?
Oh wait, I got a raw deal, bail me out! change the rules.
It's pathetic no one takes responsibility for their financial decisions these days.
Is that a conservative point of view?
Otherwise, it will take a decade to sort out the mess.
By loosening regulations on Fannie and Freddie, they would be less involved.
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