The NYT reports today that Chris Dodd and Richard Shelby have reached an agreement on a bail-out bill for distressed homeowners rather than distressed merchant banks.
The Senate bill would create an affordable housing fund, financed by the government-sponsored mortgage-finance companies, Fannie Mae and Freddie Mac, and that fund would be used in its first year to provide about $500 million for the foreclosure rescue effort.
Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, who announced the agreement, said his goal was to create a solid foundation underneath the nation’s depressed housing market.
“The primary goal here is to keep people in their homes, but also to establish a floor, a bottom to all this,” Mr. Dodd said. The foreclosure aid is tied to legislation creating a new regulatory agency to tighten oversight of the government-sponsored mortgage financiers.
Bush, of course, has said he would veto it, characterizing the victims of the bankers' housing scams as "speculators". Nothing like a little reverse spin, eh?
The worry here is, of course, just how much of the store Dodd gave away to Shelby's concern for "taxpayers" - by which he means rich taxpayers and the same investors who brought about this disaster in the first place. The AP quotes Shelby as saying: "I've long said that we should do what we can to help struggling homeowners short of asking the taxpayer to foot the bill." Which means what exactly? How is this bill going to provide a half-billion $$$ of relief without using tax money?
The answer seems to be: it isn't. Shelby has apparently sold out his un-rich taxpayers for a package of new regulations on the govt banks that will end up aiding merchant bankers.
Mr. Shelby had been particularly intent on tightening regulation of Fannie Mae and Freddie Mac, and the deal with Mr. Dodd would create a new Federal Housing Finance Agency. The agency would oversee the companies, which are private but are virtually assured of government assistance should they experience financial difficulty.
The govt banks have needed some regulatory oversight, it's true. Bush appointees have been caught recently siphoning off funds for their own use and playing the same kind of accounting games that got Enron and WorldCom in so much trouble a few years ago. But one suspects that catching typical Republican corruption and theft of public $$$ isn't really what Shelby has engineered here. The fact that the White House is now saying, through its spokesman -
“We appreciate and encourage the efforts to create a strong, independent regulator” for the government-sponsored companies. “We’ll look forward to seeing the details of the bill,” he added, “especially provisions to expand programs of the Federal Housing Administration.”
- is already cause for serious concern. That was infamous Bushie hack Tony Fratto, and when he sees a deal he likes, you run for the hills no matter how good it sounds.
Something is seriously amiss here but we'll have to wait for the details to figure out what it is.
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