Yesterday, the House Oversight and Government Reform Committee held a hearing on the granting of nearly $13 million in bonuses for executives of Fannie Mae and Freddie Mac. The day before, all but four member of the House Financial Services Committee voted to strip these bonuses for the failed government-sponsored enterprises and subject them to the federal pay scale. (Horror of horrors, the Fannie executives wouldn’t be able to make more than the vice president’s salary of $230,000!)
But when it comes to aiding millionaires, Americans should be doubly outraged at Fannie and Freddie and at their enablers in Congress. Some of the very same members of Congress expressing outrage about the bonuses may be on the verge of enlarging Fannie and Freddie’s role in the housing market and at the same time increasing government subsidies to millionaire owners of McMansions. As I wrote in National Review last month, the Democrat-controlled Senate and a handful of Republicans voted to hike the conforming loan limit for mortgages that Fannie and Freddie can buy and the Federal Housing Administration can insure to $729,750. Now, the House of Representatives has to decide whether to include this in its version of a “minibus” appropriations bill.
In the NR article entitled “What About Fannie Mae Millionaires?”, I wrote, “If this increased loan limit becomes law, it would mean that purchasers of these expensive homes — millionaires and near-millionaires almost by definition — could save thousands of dollars from below-market interest rates thanks to government guarantees.”
The House may decide as early as this week whether to go along with these McMansion subsidies. As The Wall Street Journal editorial page noted, “While cable TV is chasing the trivia of Fannie and Freddie bonuses, the real news is that late Monday a bipartisan Congressional committee announced an agreement to increase FHA’s maximum mortgage limits to $729,750 from $625,500 through Dec. 31, 2013.” The good news is there are fiscally conservative members of the House, such as Rep. Scott Garrett (R-N.J.), who are fighting against this proposed welfare for the rich.
CEI has signed a coalition letter with groups such as Americans for Prosperity and Americans for Tax Reform and housing scholars such as Peter Wallison and Edward Pinto of the American Enterprise Institute calling on Congress to oppose raising the loan limits in the looming “minibus” appropriations bill. The 99 percent, or at least the 53 percent who pay federal income taxes, should definitely make their voices heard.