Housing, Credit Woes: When Can We Exhale?
Posted by Alice Chasan on July 18, 2008
After a week of dizzying feints by the White House, the Treasury Secretary, the head of the Federal Reserve, and some members of Congress, does anyone have any idea where the Bush administration really stands on the credit/banking system and the housing crisis?
As the administration rolled out proposals to stave off the collapse of Fannie Mae and Freddie Mac, the two government-sponsored mortgage finance companies, which involve potentially investing billions of taxpayer dollars in shares of the companies, the president and his minions began to talk out of the other side of their mouths about the long-languishing foreclosure rescue bill that Bush has been threatening to veto for months, because it contains a $4-billion neighborhood stabilization provision.
As of Tuesday, July 15, the president was speaking about the urgency of the bill’s passage.
At first I assumed I’d misheard or misinterpreted what W. had said, especially because there was nary a peep on this about-face in the mainstream media.
So I started to look for clues. And thanks to The Google, I picked up evidence that horse-trading had reached full swing between the administration and its heretofore arch-foes on the Democratic side of the aisle.
When last I googled, I found that Treasury Secretary Henry Paulson and Rep. Barney Frank (D-Mass.), chair of the House Financial Services Committee, had done a whole lot of huddling yesterday to craft a plan to shore up the “mortgage giants” Fannie Mae and Freddie Mac (one wonders why the MSM resort to this cliche — it may add an air of melodrama to headlines, but it sheds absolutely no light on what these government sponsored entities are or what’s at stake for the country if they fail).
Frank and other House Democrats have told Paulson that they expect the plan to be subject to the existing annual federal debt limit and will not accede to Paulson’s request to exempt any potential expenditure for Fannie and Freddie from the public-debt stricture.
Meanwhile, some Republicans have distanced themselves from the housing bill because of displeasure with the administration’s plans to pump money into Fannie and Freddie. Said Sen. Jim Bunning, Republican of Kentucky, “When I picked up my newspaper yesterday, I thought I was in France.”
So, to recap for those of you who have started to fill in your flow charts: Rep. Frank, a champion of affordable housing and architect of the House foreclosure rescue bill, has now been transformed into the agent of the administration’s salvation as he works with Paulson to fold the administration’s scheme for keeping Fannie and Freddie solvent into the housing bill.
To further complicate the economic policy landscape, Bush and Fed chairman Ben Bernanke offered mind-bendingly opposing views of the state of the economy. Bush gave Americans the Lamaze prescription for “nervousness” about losing your home, your savings, and the nation’s largest mortgage institutions — “Take a deep breath” — at a rosily optimistic news conference in the Rose Garden on Tuesday at precisely the same time that Bernanke was testifying before the Senate Banking Committee, offering a litany of economic troubles facing the country. Curiouser and curiouser, as they say in Wonderland.
“The Daily Show”‘s Jon Stewart did the best job of capturing the administration’s dual reality on these matters.
As for the fate of the housing bill and its neighborhood stabilization package (championed by NHI and its sister housing and community advocacy organizations, tune in next week for the latest installment in the long-running series, “Breathing Lessons: Surviving the Bush Administration.”