The Housing Bill Miracle That Wasn’t
This morning President Bush signed legislation that is probably considered as America’s first and best hope to shore up the ailing housing market and the fragile U.S. economy. The legislation champions and provides salvation for mortgage twins Fannie Mae and Freddie Mac.
“We look forward to putting in place new authorities to improve confidence and stability in markets, and to provide better oversight for Fannie Mae and Freddie Mac,” said White House spokesman Tony Fratto. The legislation is simply about confidence, not about helping stressed home buyers. As TNTalk! discussed in Sunday’s article, this housing law will help very few Americans because of the provisions provided. The devil is in the details.
What the housing law does help is the appearance of strength, shoring up confidence in an otherwise faltering system, dealt its’ blow by banking corruption that federal government and sleeping regulators didn’t have the moral strength to stop.
Combined with recent measures by the Federal Reserve System, the present reaction is clear. The government isn’t very confident in its emergency measures to support the economy and expects some tough times in the immediate future.
Pundits fear “that as persistent housing woes slow down the economy, some observers have worried that the housing package is too little, too late, and that consumer benefits will be muted.” By reading the text of the legislation, the effort is designed primarily to shore up the government system rather than provide an overall help to the American consumer. The fact remains that many foreclosures that are racking the economy are simply not preventable at this hour in the crisis.
The federal government is being very tight with citizens, even frugal with FHA taxation provisions for certain taxpayers. Clearly, the small guy is not the concern of the Feds, although the legislation may actually help new home buyers that are not involved in the mortgage debacle by freeing up the marketplace for those Americans that remain financially viable.
In the spirit of more regulation, the housing law also creates a new regulator for Fannie Mae and Freddie Mac called the Federal Housing Finance Agency.
“We” the people, at least the ones with flaky mortgages, must shoulder some of the blame for the crisis. Questions were rarely asked as “we” collectively consumed beyond personal means and pushed financial obligations into eternity. The party tab has been building for quite some time and now that the monthly tab is beyond payment or otherwise due, many pockets are empty. You know who you are.
Government and pseudo-government authorities are being forced to choose between two evils: massive intervention at huge expense to the future or the chaotic fallout from broken standards. Either choice is unenviable and quite honestly, had “we and government” been up on the game, totally unnecessary.
However, with the election in the political cross hairs, leaving things to chance in the short-term isn’t a viable option of the politicians in power. Nothing is free, even in the short-term. Whether the decisions being made are best: politicians may be second-guessing that concern for many years to come.
In the meantime, the nation has collectively avoided the appearance of a major economic depression: at least for the short-term. After the election, it’s your call.