Republicans Want Low-Income Renters to Pay for Mortgage Bailout

Posted by Lindsay Beyerstein, Majikthise at 7:01 AM on May 19, 2008.

The Republican ranking member from the Senate Banking, Housing, and Urban Affairs Committee wants to pay for Chris Dodd's mortgage bailout program out of a trust fund for housing the poorest of the poor, according to the National Coalition for Low Income Housing:

WASHINGTON, DC - Responding to pressure from Ranking Member Senator Richard Shelby (R-AL), the Senate Banking, Housing, and Urban Affairs Committee appears to be on the verge of diverting funds designated for a housing trust fund for housing for the poorest Americans to pay for Committee Chairman Christopher Dodd’s (D-CT) new program to refinance homeowners facing foreclosure.

In his bill “The Federal Housing Finance Regulatory Reform Act of 2008,” Chairman Dodd proposes to allow the Federal Housing Administration to insure refinanced mortgages of homeowners who face foreclosure. The Congressional Budget Office estimates this new program creates a potential liability for the federal government of $1.7 billion.

Reports are that Senator Shelby will only agree to the new FHA program if it is paid for by non-taxpayer funds. Senator Dodd’s bill also creates a housing trust fund with resources from Fannie Mae and Freddie Mac to build or preserve rental housing for extremely low and very low income people. Senator Shelby wants those funds to be used to pay for the new FHA program instead. [NCLIH]

Bailing out mortgage-holders sounds progressive until you realize that you're also bailing out the irresponsible lenders who caused the problem in the first place. They're just going to do it again, knowing that the state will pay them, even if their customers can't.

"Too big to fail" is a nice way of saying "corporate welfare."

Taking the money from the poorest of the poor to bail out sub-prime sharks and their customers is just perverse.

Tagged as: house, gop, dodd, foreclosures, mortgage crisis