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    FreedomWorks urges opposition to $300 billion mortgage bailout by Feds

    BY Kay Day
    07/10/2008
    by Kay Day on 7/10/08.

    FreedomWorks, a policy group based in Washington, D.C., is urging taxpayers to voice opposition to HR3221, popularly known as the Dodd-Frank-Countrywide Mortgage Bailout. The organization wants people in Florida’s 2nd District to contact Kristen Hawn [866-887-5841], communications director for the Blue Dog Coalition, a group of Democrats who claim a “deep commitment to the financial stability and national security of the United States.” FreedomWorks hopes the Blue Dogs “buck party leadership and do the right thing for fiscal responsibility by opposing the mortgage bailout when it reaches the House of Representatives.” FW also suggests calling Rep. Allen Boyd (D-2nd Dist.) at 1-866-928-3035 and ask him to show leadership by opposing the bailout.

    Most of my readers already know how I feel about bailouts and taxes. It’s my opinion the mortgage mess should be borne by those who created it—irresponsible lenders and irresponsible purchasers. I blogged about this at The US Report when the mortgage crisis story broke. If you think we taxpayers won’t subsidize the bailout, think again. Courtesy of FreedomWorks, we have some figures and facts that underline this poorly conceived bailout.

    HUD Secretary Steve Preston publicly criticized the bill: “The bill currently moving through the Senate would place a moratorium on risk-based pricing. That would be a big mistake. FHA will have to increase premiums across the board on all borrowers or, alternatively, seek taxpayer funds in October to cover potential losses, or cut back on the program at the very time we are an island of hope for hundreds of thousands of Americans."

    According to a FW news release, the mortgage bailout creates a new housing trust fund that will collect an estimated $530 million a year through a new levy on Fannie Mae and Freddie Mac. The levy must be paid whether Fannie Mae and Freddie Mac make a profit or not.

    The tax increase is part of broader housing legislation that gives $300 billion in new taxpayer loan guarantees through the FHA. The new program allows banks to cherry-pick the worst loans in their portfolio and shift the liability to U.S. taxpayers.

    FW President Matt Kibbe commented, “Rome is burning, and the Senate is adding lighter fluid. The GSEs [government sponsored enterprises] represent a profound systemic risk, and investors are clearly concerned, yet Congress is moving to pass a bill that may make matters worse. This bill is advertised as strengthening regulation of the GSEs, yet it imposes a permanent new levy that will materially undermine Fannie Mae and Freddie Mac.”

    An email from Kibbe’s group suggests the Blue Dogs should be some of the most vocal opponents of this $300 billion bill, since they “supposedly oppose deficit spending.”

    Somehow, when voters ushered in change last November, I’m thinking this isn’t the type of change most had in mind. This bill is an example of pandering, at the cost of many responsible Americans, to those who deluded themselves with aspirations of profit and gain. If we bail out these lenders and borrowers, what’s next? Maybe tax subsidies for plastic surgery so we can feel good about ourselves?

    Check out the FreedomWorks website and make those calls. Let’s hold our legislators accountable and see they do the same when they spend taxpayer dollars.