Editorial: Biden’s Freddie Mac Fiasco
If the Biden administration is going to throw taxpayers under the bus . . . or steamroller . . . it should pay a political cost.
Republicans have rightly hammered the Biden administration for flagrant vote-buying schemes like transferring hundreds of billions of dollars in student loan debt to taxpayers or selling the Strategic Oil Preserve. Now, there’s a new scheme that has received less attention. But it’s no less shameless.
Freddie Mac, the federal-backed mortgage insurer giant, sent a proposal to the Federal Housing Finance Agency (FHFA) to begin buying second mortgages that provide homeowners with cash for their home equity.
This means that Freddie — and the taxpayers — would insure that these second mortgages are repaid, artificially lowering their cost for homeowners.
With cheaper second mortgages, expect more homeowners to tap into their equity for cash, potentially juicing the economy in the run up to the 2024 election. Everyone’s a winner, right?
Of course not. Government insurance works until it doesn’t. The Biden Administration is effectively forcing taxpayers to pick up pennies in front of a steamroller. There is a very real and very catastrophic risk that, should home prices decline, taxpayers will pick up a massive tab.
Some of us remember that Fannie and Freddie played an enormous role in the 2007 housing crash. After artificially raising home prices and encouraging irresponsible borrowing, taxpayers bailed out these insurers, cementing the institutions as taxpayer-backed. As housing prices are higher today (adjusted for inflation) than 2006, it would be foolish to force taxpayers to insure more mortgages.
Sens. Bill Hagerty (R., Tenn.) and Tim Scott (R., S.C.) have led the charge against this scheme, but more Republicans — including those beyond the Banking committee — should join in. It’s good politics and good policy to condemn this ruse , and Congress should demand documents and communications between the White House, Freddie Mac, and the FHFA. If the Biden administration is going to throw taxpayers under the bus . . . or steamroller . . . it should pay a political cost.
