JBS Action Alert: Update -- Senate Passes Housing Bailout Bill, President to Sign

Written by Wayne Olson

Thursday, 24 July 2008 07:50

Update, July 26. Today the Senate passed H.R. 3221, the housing bailout bill, by 72 to 13 (Roll Call #186). President Bush will sign quickly.

H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act of 2008, was passed by the House 272-152 on Wednesday, July 23, 2008 (Roll Call #519).

	Ron Paul on the Freddie/Fannie Bailout

The Senate voted overwhelmingly (80-13) on Friday morning to end debate, with a vote to clear the housing bill expected on Saturday, July 26. Enactment of this legislation would be a victory for socialism and big government, but a travesty for U.S. taxpayers and limited government. This one-time energy bill was transformed into a vehicle for mortgage foreclosure prevention, then very recently revised again to include plans for preventing the failure of Fannie Mae and Freddie Mac, share-holder owned companies that have lost billions of dollars in the last year and whose stock prices plummeted, but then rebounded this week.

Fannie and Freddie are government-sponsored enterprises (GSEs), created by Congress to serve governmental objectives, such as that of encouraging home ownership. They are two of the world’s largest financial companies, holding two out of every five mortgages. Although Fannie Mae and Freddie Mac operate much like other companies, their close relationship with government is being used as a pretext for exposing taxpayers to part of their $5.2 trillion in outstanding debt and obligations.

H.R. 3221 would grant the administration authority through 2009 to loan money through the Treasury to Fannie and Freddie, or to buy (prop up) their stock. The plan has no dollar cap on the related spending other than by being subject to the nation’s statutory debt limit. The measure includes raising the national debt limit from $9.8 trillion to $10.6 trillion. As an interim measure until legislation is enacted, the Federal Reserve has given open lines of credit to Fannie and Freddie.

The Congressional Budget Office (CBO) announced that the bailout plan could cost the government $25 billion over two years. It was also said that a slight chance exists that additional losses could exceed $100 billion. Senator Judd Gregg (NH) called the numbers arbitrary and of little value. Considering that recent budget deficits are approaching half a trillion dollars, Americans desensitized to government spending might not be alarmed. But remember, the two companies have $5.2 trillion in outstanding debt and obligations, and the Bush administration and the Treasury had wanted Congress to provide a virtual blank check with no caps, not even by the statutory debt limit. If a worst case scenario occurs, according to Rep. Jeb Hensarling (R-TX), the U.S. $9.5 trillion national debt could explode by 50 percent in an instant.

For additional reasons to oppose this housing bill see:
The Freedom Index, The New American, July 21, 2008 (See House Vote Description #29 and also Senate Vote Description #27.)

Click Here to Take Action to Oppose H.R. 3221.

A Senate vote is imminent, so please call or contact your Senators at once!

Talking Points to Your Senators:

Please oppose H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act of 2008. Instead rescue taxpayers from big government and hyperinflationary spending.
Taxpayers should not be forced to guarantee bad loans made by big banks and lenders, particularly Fannie Mae and Freddie Mac. Allow the free market to work and cleanse itself of excesses. Let poorly run Fannie and Freddie fail or be broken up and sold. It will teach other banks to be circumspect and not expect a bailout.
Taxpayers should not be forced to cover bank and lenders' losses on irresponsible and scandalous housing loans made to buyers who obviously could never afford their payments when extreme, artificially depressed adjustable mortage rates are reset higher.
It is unfair for private investors of Fannie and Freddie to reap profits, as in the bubble years, but now expect the taxpayers to absorb their losses, potentially up to $5 trillion.
Taxpayers should not be forced to prop up the stock price of any company. Put a stop to outrageous government manipulation of the stock market. It is a blatant repudiation of free markets and a warning sign of totalitarianism and corruption.
Oppose expanding the emergency powers of the Federal Reserve. Reduce them instead.
Do not allow this flawed bill to be railroaded through the Senate without allowing its members or the public sector time to scrutinize the latest version and suggest alternatives.