Housing bill may not help housing nor banks and is a huge risk for taxpayers

The housing bill being rushed through Congress may not help the housing market or banks and will cost taxpayers billions, according to the lede editorial in today’s edition of The Wall Street Journal.

This is the best explanation I’ve seen of the housing bill that Democrats are pushing through Congress and President Bush promises to sign.

In its editorial today, The Wall Street Journal (http://www.opinionjournal.com) calls on Senate Republicans to filibuster the bill until the most offensive provisions are deleted. Good luck.

Congressional Republicans have spent the last decade trying to out spend Democrats. But their attempts at vote buying are being trumped by the Democrats, and the Republicans wind up offending their fiscally conservative base.

What’s sad about all this is that the housing issue is so complex that the advocates of the bailouts of Fannie Mae (FNM), Freddie Mac (FRE) and the politicians and executives of home builders, mortgage bankers and Wall Street geniuses who profit from their boondoggles can convince voters that the housing bill is a good thing. Long-term, it’s not.

The WSJ editorial concludes:

For proof of how powerful they remain, even in their straitened circumstances, look no further than Majority Leader Harry Reid’s refusal even to allow a vote on an amendment proposed by South Carolina Republican Jim DeMint to bar the two from lobbying in the future. Senator DeMint has threatened to filibuster if his amendment isn’t aired. By itself, the antilobbying provision won’t save the taxpayer from Fan and Fred, but it’s a start.

Democrats are rushing this bill through because of the favors for Fan and Fred and new spending for left-wing activists like Acorn. But the reluctance of many Republicans to look out for taxpayers is harder to comprehend. They’ll get little credit this year for letting the majority Democrats say they did something for “housing,” and GOP voters will blame them for rescuing the irresponsible.

Meantime, the White House and Treasury are betting that this bill will put a floor under the housing market and buoy bank stocks, and thus avoid a deeper financial downturn. The rescue will only delay a housing market bottom, and it may or may not help bank stocks. The one certainty is that taxpayers are assuming a huge new risk.

 

 

 

 

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