Frank: Abolish Fannie and Freddie

posted at 1:36 pm on August 18, 2010 by Ed Morrissey

Call it the New Modesty. Barney Frank suddenly can’t understand why government should push home ownership, nor why government should be involved in mortgages at all. In an interview with Neil Cavuto on Fox Business, Frank called not just for the liquidation of Fannie Mae and Freddie Mac, but also for curtailing federal government interest in home ownership:


Fannie Mae and Freddie Mac should be abolished rather than reformed as part of the Obama administration’s planned overhaul of the government’s role in housing finance, Rep. Barney Frank, chairman of the House Financial Services committee, said on Tuesday.

“They should be abolished,” Frank said in an interview on Fox Business, when asked whether the mortgage giants should be elements in housing market reform. “They only question is what do you put in their place,” Frank said.

The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidize housing, Frank said in the interview.

“There is no more hybrid private-public,” the Massachusetts Democrat suggested. “If we want to subsidize housing then we could do it upfront and let the budget be clear about that.”

Why does Frank see the need to stop federal home-ownership initiatives?

“There were people in this society who for economic and, frankly, social reasons can’t and shouldn’t be homeowners,” Frank said. “I think we should, particularly, stop this assumption that you put everybody into homeownership.”

That’s certainly the lesson from the collapse of the housing bubble and the secondary derivative markets. It’s also a sea change for Frank. While he nearly dislocates his shoulder attempting to pat his own back by claiming that he has said this all along, it’s simply not true. Frank, in his role on the House Financial Services Committee, played a huge part in creating and maintaining the government intervention that severely distorted the lending markets. Whether or not he ever uttered a comment along the way about overdoing home ownership, Frank’s actions helped to create and maintain those policies, and he defended them repeatedly over the last twelve years.

However, the New Modesty isn’t a reference to Frank’s self-promotion, but the way that the adherence to the free market seems to have gained traction over the last few months. Just last year, Frank and his allies were busily claiming that the free market caused the collapse, and that only government intervention could restore American prosperity. Eighteen months into the Obama administration, Frank now wants to sound like a born-again acolyte of Adam Smith, or at least as close as Frank can approximate such a pose. Modesty in government is suddenly hot, even among Massachusetts liberals.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Comment pages: 1 2

I agree. I’m skeptical that this is a sudden epiphany on Franks part. He’s still a socialist, and still supportive of Obama, and the agenda. They may close Fannie, and Freddie, but will re-name them, and re-open them, and all real estate transactions will go thru the government. It’s all a matter of time, if we give it to them.

Now, more than ever, your vote against this take over of our country is important!!!

capejasmine on August 18, 2010 at 2:05 PM

Not exactly, but close. Here’s my take:

Barney and his like-minded friends have always wanted more hundreds of billions of federal dollars poured into low-income rental housing. The old Section 8 program was a HUGE moneymaker for a lot of developers in Massachusetts back in the 1970s and they have been clamoring for a nother gravy train ever since Regan killed the program. These developers were a big source of campaign cash for Democrats, including Barney and John Kerry and all the Kennedys.

For a while, Barney and co. were able to manipluate Fannie and Freddie into investing in some of these low-income housing deals, using the obscene profits generated by their single-family mortgage business. That’s one reason why Barney and co. left the GSEs alone and didn’t want them tightly regulated.

When the GSEs failed, it became apparent even to Barney that the old model wasn’t going to work anymore. He has never really cared about homeowners or homeownership. His passion is for more old-fashioned straight-up subsidized rental housing, preferably though a resurrection of the old Section 8 program that made so many of his friends in Massachusetts multi-millionaires.

So he is fine throwing the GSEs under the bus now. He wants the tax dollars that are now being burned up by Fannie and Freddie to go into subsidies for rental housing. He also wants to take this whole thing away as an issue that Republicans are beating him over the head with.

The situation is being helped by the blatant way in which the big banks are still out there crying for some kind of federal guarantee for mortgages or mortgage-backed securities. Barney can successfully argue that if the big banks want it, it’s probably a bad idea (and he is right about that.) No more government backing for the big banks! More government backing for housing for the poor! It all fits together.

rockmom on August 18, 2010 at 2:29 PM

OMG!!!! Obama has now turned raving liberal lunatics into conservative republicans. I now can see pigs flying out of my office window!

xler8bmw on August 18, 2010 at 2:30 PM

Limiting deductions on most households’ largest asset is a more effective wealth redistribution scheme.

So I take Frank’s turnabout to be a signal that real or proxy taxes on assets will be favored by the Deficit Reduction Panel over taxes on income.

cthulhu on August 18, 2010 at 2:18 PM

This and the elimination of the Bush tax cuts pretty much should eliminate half of the middle class overnight.

Johnnyreb on August 18, 2010 at 2:31 PM

They will be sticking all the Section 8 people into foreclosed, abandoned houses. Mark my words. Fannie, Freddie- the new government landlords.

NTWR on August 18, 2010 at 1:57 PM

HUD has been doing that for years. That’s how my suburban middle class neighborhood became part of the HUDhood.

bloviator on August 18, 2010 at 2:31 PM

Opportunist.
He must be hearing rumors about an investigation into Fan/Fred by the GOP in 2011.

carbon_footprint on August 18, 2010 at 2:31 PM

IT’S NOT happening the way President Obama had planned. Unemployment blew past his 8 percent ceiling and hasn’t looked back. Private sector investment in new jobs and capital has languished. Even the head of the president’s Council of Economic Advisers, Christina Romer, has resigned.

Grow Jobs and Shrink Government – it’s pretty simple.

dnlchisholm on August 18, 2010 at 2:32 PM

What a change of tune. He’s right this time of course but the damage is done. All around me businesses are going under. Some of these have been around for a long time. Had an older man come asking my nephew for a job the other day. He’s been out of work for a time and we would have liked to hire him but have laid off. It makes me feel very sad whenever I think about him. I can picture the worried look on his face. Felt like crying. DC and it’s short sighted stupidity have cause this and they are too set and stubborn to take steps to begin change.

jeanie on August 18, 2010 at 2:33 PM

rickyricardo on August 18, 2010 at 2:27 PM

And like it would be if Mohammad denounced Islam, Frank is doing the same, using Takeyya.

Tav on August 18, 2010 at 2:33 PM

Fannie and Freddie are already the nation’s biggest landlords. They’ve been renting out hundreds of foreclosed properties because it’s easier than trying to sell them into a down market. It’s one reason why their losses have been mounting.

I do think some liberals have a vision of somehow turning all these forcelosed properties into subsidized rental housing. Kinda hard to get there from here though.

rockmom on August 18, 2010 at 2:34 PM

It’s a trap.

Dominion on August 18, 2010 at 2:08 PM

A marxist wolf in free market sheep’s clothing.

itsacookbook on August 18, 2010 at 2:36 PM

But where will Barney’s butt buddies work if there is no Fannie and Freddie Mac?

ramrants on August 18, 2010 at 2:37 PM

Opportunist.
He must be hearing rumors about an investigation into Fan/Fred by the GOP in 2011.

carbon_footprint on August 18, 2010 at 2:31 PM

Ohhh, it’s going to be brutal if the Repubs have the nerve to really get down to the roots of the sinister partnership between Fannie Mae and the Democrats. Barney’s just a bit player in all of it. At one point our entire national housing finance system was one giant slush fund and employment agency for Democrats.

rockmom on August 18, 2010 at 2:37 PM

But where will Barney’s butt buddies work if there is no Fannie and Freddie Mac?

ramrants on August 18, 2010 at 2:37 PM

Good question.

You may think that is a joke, but there’s a great deal of truth to it. One of the real stories that has yet to be told about all of this.

rockmom on August 18, 2010 at 2:38 PM

rockmom on August 18, 2010 at 2:29 PM

I believe you’re 100% correct. Everything he, dodd and obama have been doing has been to stop home ownership and for rental subsidies. The EPA laws forcing green in peoples homes to cost them a fortune. Nothing this dem congress and Obama does is for the good connect the dots.
http://www.realclearmarkets.com/articles/2010/07/28/the_age_of_subsidized_rental_housing_98594.html

xler8bmw on August 18, 2010 at 2:39 PM

Would Barney also say that not everyone should have health insurance too?

Avatar72 on August 18, 2010 at 2:40 PM

Just to expand on that a bit, it’s well-known that the Deficit Reduction Panel is going to come back after the elections — and the way it’s stuffed, it’s going to come back with huge tax hikes and no meaningful spending cuts….

cthulhu on August 18, 2010 at 2:18 PM

God forbid however that the committee should recommend the obvious, that those overpaid federal employees have their salaries and pensions and other lavish benefits cut.

slickwillie2001 on August 18, 2010 at 2:41 PM

That tells me that they’re going after the home mortgage interest deduction in December.

cthulhu on August 18, 2010 at 2:12 PM

That won’t affect foreclosures at all.

BadgerHawk on August 18, 2010 at 2:43 PM

Read between the lines. Communist and socialist are anti-property ownership. This has EVIL written all over this!

xler8bmw on August 18, 2010 at 2:44 PM

Frank long ago lost the right to any assumption of honesty on his part. Whatever he says or does, it’s to support his agenda, which is personal power first, party power second.

He has a long history of blatant lies, nothing he says can be taken…. pretty much at all.

And the economic damage the Dems have done in just a few years will take a generation to fix – and I don’t want them to play ANY part in “fixing” it because everything they touch turns to crap.

Merovign on August 18, 2010 at 2:45 PM

Anyone remember the video of the last time Frank was on Cavuto?
He went mad. At that time, I believe he was defending Fan/Fred.

carbon_footprint on August 18, 2010 at 2:46 PM

This guy is a blatant liar. I don’t believe a word of this. Hold on to your pocketbooks.

d1carter on August 18, 2010 at 2:47 PM

Personally, I think this is the tell tale quote.

The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidize housing, Frank said in the interview.

It makes more sense to me that he wants 100% control over the mortgage market than free market reforms.

John Deaux on August 18, 2010 at 2:47 PM

Frank: Abolish Fannie and Freddie

Righhhht Barney. Since Fannie and Freddie are in hock so deep to the taxpayers, they can’t donate to you anymore.

So, let’s get rid of their a$$ and setup a new organization that can send money!

BacaDog on August 18, 2010 at 2:49 PM

“There is no more hybrid private-public,” the Massachusetts Democrat suggested. “If we want to subsidize housing then we could do it upfront and let the budget be clear about that.”

While you could say, the bigger the liberal, the bigger his hypocrisy, and be perfectly factual, this looks to me that Frank is unashamedly calling for government nationalization of housing.

Soviet Socialist States of America.

Speakup on August 18, 2010 at 2:51 PM

What a liar the new FHA bill is a bailout of the FHA. All new mortgages and refinances will have huge increases.

xler8bmw on August 18, 2010 at 2:51 PM

You all are missing the point. Abolish Freddie and Fannie and the market will either collapse or go back to nobody being able to get a mortgage unless you have excellent credit and 20% down. Either way, people will clamor for government to step in. That is when the lightbringer will step in to help the people.

Kafir on August 18, 2010 at 2:52 PM

Why does Bawney Fwank voision 2010 remind me of John McCain circa 2005?

Economic and social reasons why some people shouldn’t be homeowners? Ya don’t say!!! Ya mean, like, people need MONEY to buy a house? Sounds like a gweedy banka! What’s the Great Anointed Community Awganizah gonna say? Ya mean he won’t pay the mortgage for the Fort Myers lady? All dem po’ folk out on da street on their Fannie or payin’ RENT? Oh, the injustice of it all !!!

Tolja so, Bawney. Ya shoulda listened 5 years ago. But better late than never.

Steve Z on August 18, 2010 at 2:53 PM

Say, Barney: lets get this done BEFORE the election, hmmmm?

You want them all to go: Freddie, Fannie, Ginnie, Sallie.

Here is the transition plan.

Cut off their access to the treasury. Hire an accounting firm to go over their books. Hand one share of all of those GSE’s to each and every taxpaying citizen. Let the adults figure out what to do with this once we know just how bad they are.

They will disappear nearly over-night and be liquidated… that will be a hard shock to a market already shocked, but once those properties are washed into the system and a real value given to them, that will be that.

Good luck on getting that through with your colleagues, Barney.

If you Incumbistani try any thing else, then that will tell me loads about your true motives… and that will be it for all of those who vote on anything else, too.

ajacksonian on August 18, 2010 at 3:01 PM

I believe you’re 100% correct. Everything he, dodd and obama have been doing has been to stop home ownership and for rental subsidies. The EPA laws forcing green in peoples homes to cost them a fortune. Nothing this dem congress and Obama does is for the good connect the dots.
http://www.realclearmarkets.com/articles/2010/07/28/the_age_of_subsidized_rental_housing_98594.html

xler8bmw on August 18, 2010 at 2:39 PM

Exactly. Liberals ultimately want to empty the suburbs and force us all back into the cities, into apartments owned by wealthy liberals or by the government. If you read any liberal think-tank report on housing patterns or development in the U.S., they always “blame” the FHA and federal highway construction for “subsidizing” the growth of suburbs and the emptying out of the cities. This futher led to racial segregation and all sorts of other social “bads.” It’s an article of faith with them that America was “fairer” when everyone lived in crappy city apartments and tiny houses.

rockmom on August 18, 2010 at 3:03 PM

Abolish Freddie and Fannie and the market will either collapse or go back to nobody being able to get a mortgage unless you have excellent credit and 20% down.

Kafir on August 18, 2010 at 2:52 PM

So, you mean go back to the way it was before the CRA screwed up the market? The only people who should be getting a mortgage are the ones with excellent credit and 20% down.

Vashta.Nerada on August 18, 2010 at 3:04 PM

You all are missing the point. Abolish Freddie and Fannie and the market will either collapse or go back to nobody being able to get a mortgage unless you have excellent credit and 20% down. Either way, people will clamor for government to step in. That is when the lightbringer will step in to help the people.

Kafir on August 18, 2010 at 2:52 PM

This attitude kills me. We had a perfectly well functioning housing and mortgage market before Fannie and Freddie took over half of it and became leviathans. These two companies very deliberately manipulated both Congress and the private mortgage industry to support their runaway growth, purely to make the excutives who ran them incalculably rich. People got houses and loans when rates were at 19% in 1982. If we abolished Fannie and Freddie TOMORROW, rates might go up by 2-3%, but they would still be historically low.

rockmom on August 18, 2010 at 3:06 PM

It’s an article of faith with them that America was “fairer” when everyone lived in crappy city apartments and tiny houses.

rockmom on August 18, 2010 at 3:03 PM

Not only that, but it is easier to keep an eye on people when they are crammed into urban areas, and if you control over a third of their spending via their rent, you control their vote.

Vashta.Nerada on August 18, 2010 at 3:07 PM

If he weren’t a sociopath I’d almost think he feels remorse for nearly destroying the country (of course, it’s not yet clear that he hasn’t). But considering that’s unlikely, I’m not sure what could be his angle. Maybe he’s finally come to the realization that being Philosopher King of a 3rd world nation might not be as fun as what he’s accustomed to, so it’s time to play grown-up for a while.

Blacklake on August 18, 2010 at 3:10 PM

“There were people in this society who for economic and, frankly, social reasons can’t and shouldn’t be homeowners,” Frank said. “I think we should, particularly, stop this assumption that you put everybody into homeownership.”

No Shinola, Sherlock.

Bob's Kid on August 18, 2010 at 3:10 PM

But better late than never.

Steve Z on August 18, 2010 at 2:53 PM

Not in this case. The horse escaped, ran down the road, and got hit by a cement truck and now Bawney’s saying we should perhaps maybe close the barn door.

Kafir on August 18, 2010 at 3:10 PM

Vashta.Nerada on August 18, 2010 at 3:07 PM

Yeah, some of it is about control, but a surprising amount of it is simple liberal utopianism and wishful thinking about a “fairer” society and a warped sense of “the good old days” before we had all this nasty suburban sprawl. Of course, it’s also been proven that renters are far more liberal and homeowners tend to be more conservative. It’s why cities are so much more liberal than smaller towns and suburban counties. People who do not own property will not feel they have anything worth defending from an ever-encroaching state.

Don’t think that wasn’t also a reason behind George Bush’s “ownership society,” either. Many conservative thinkers have long favored subsidizing homeownership and even business ownership because homeowners and small business owners tend to become more conservative over time.

rockmom on August 18, 2010 at 3:15 PM

rockmom on August 18, 2010 at 3:06 PM
Vashta.Nerada on August 18, 2010 at 3:04 PM

I agree, but how are you going to keep them down on the farm now that they’ve seen Paris?

Since there was a time when anybody could get a mortgage, if we go back to where only people with means can have them, how long do you think it will take for Democratic candidates to start demonizing big bankers and their stingy policies on home ownership? Never underestimate the Democrats’ capacity for demagoguery.

Kafir on August 18, 2010 at 3:15 PM

I wouldn’t trust Frank. He is a socialist first, all else is comes after that.

DID he say he has ALWAYS been critical of theis notion that everyone should be homeowners???????

Neil should have followed up with the question…. WHEN???

jeffn21 on August 18, 2010 at 3:16 PM

how long do you think it will take for Democratic candidates to start demonizing big bankers and their stingy policies on home ownership?

Kafir on August 18, 2010 at 3:15 PM

They already demonize bankers, so I don’t see a huge downside there.

Vashta.Nerada on August 18, 2010 at 3:20 PM

This lying little weasel should be required to build his own prison cell with his bare hands and then be confined to it for life, never to be heard from again. The pain and grief he’s caused this country with his moronic ideas has been incalculable.

trigon on August 18, 2010 at 3:21 PM

Frank now wants to sound like a born-again acolyte of Adam Smith, or at least as close as Frank can approximate such a pose.

barney sees the writing on the wall. A republican majority in congress in 2011 and a congressional majority and the white house in 2013 may very well mean some serious and legitimate investigations. barney is hoping that the republicans see him as a useful tool and don’t stick him in prison for the rest of his life.

peacenprosperity on August 18, 2010 at 3:25 PM

I wouldn’t trust Frank. He is a socialist first, all else is comes after that.

I’ve come to the realization that although there are some hardcore ideologues in the democrat party (probably barry is one) and most of those can be recognized by how dumb they really are, the powers to be in that party are plain and simply gangsters. They are using the path that gives them the most power and wealth.

peacenprosperity on August 18, 2010 at 3:27 PM

The old Section 8 program was a HUGE moneymaker for a lot of developers in Massachusetts back in the 1970s and they have been clamoring for a nother gravy train ever since Regan killed the program.

I’m not sure where you get your info, but Section 8 is alive and kicking. Section 8 Housing Vouchers

As late as 2002, I was working for a company that did screenings for apartment renters and Section 8 was a big part of the program.

Common Sense on August 18, 2010 at 3:34 PM

Bawny has sucked enough money out of Fannie and Freddie,so now he wants to abolish it.Typical Progressive,Liberal Democrap.I got mine,to he** with everyone else.

DDT on August 18, 2010 at 3:39 PM

Has Bawney gotten more butch with age?

Akzed on August 18, 2010 at 3:46 PM

The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidize housing, Frank said in the interview.

Welcome to Uncle Sam’s Neighborhood where ACORN is the landlord/super and ALL non-UNION personel (plumber, electrician, roofer, carpenter) are prohibited from working on the property.

TN Mom on August 18, 2010 at 3:50 PM

This is like Richard Simmons wanting to abolish annoying exercise videos.

J.E. Dyer on August 18, 2010 at 3:55 PM

Just my first impression of the story without hearing the video or reading carefully…. but this is new.

The world is a strange place.

petunia on August 18, 2010 at 3:56 PM

“There were people in this society who for economic and, frankly, social reasons can’t and shouldn’t be homeowners,”

Hmmmm, I wonder what social reasons Barney sees as disqualifying for home ownership?

journeyintothewhirlwind on August 18, 2010 at 3:58 PM

journeyintothewhirlwind on August 18, 2010 at 3:58 PM

I asked the exact same thing earlier. I can’t believe he wasn’t asked to expand on that. I want to know what social reasons would preclude homeownership.

Cindy Munford on August 18, 2010 at 4:01 PM

Of course, it’s also been proven that renters are far more liberal and homeowners tend to be more conservative. It’s why cities are so much more liberal than smaller towns and suburban counties. People who do not own property will not feel they have anything worth defending from an ever-encroaching state.

Don’t think that wasn’t also a reason behind George Bush’s “ownership society,” either. Many conservative thinkers have long favored subsidizing homeownership and even business ownership because homeowners and small business owners tend to become more conservative over time.

rockmom on August 18, 2010 at 3:15 PM

When Bush was talking about the “ownership society” and all that It sounded really good.

But the reality is if people are handed anything without the attendant work involved to get it… they are not sufficiently emotionally invested to become conservative.

If they are given a handout they remain liberal, and it is little different from any other government handout.

petunia on August 18, 2010 at 4:02 PM

Bawney is just trying to pull up his pants and hopes the tapes that prove the opposite get replaced with the new one, not gonna happen bawney we have the tapes.

tim c on August 18, 2010 at 4:22 PM

Why is it that every time I hear Beans and Frank talk, I feel he is suffering from a crack addiction?

chickasaw42 on August 18, 2010 at 4:39 PM

Wow. I’d assumed ol’ Barn was in one of those “can’t lose” districts, but . . . is it even possible that he’s worried about losing his seat?

tsj017 on August 18, 2010 at 2:10 PM

Here is a chart that shows how very vulnerable Rep. Barney Frank is for the 2010 elections.

http://www.boston.com/news/local/massachusetts/graphics/01_21_10_districts/

Barney received the lowest percentage of votes (64%)in his 4th District of all of the Congressional Districts in Massachusetts. And that was before Scott Brown won his statewide race in Massachusetts.

Take a look at the chart above to see how well Scott Brown did in Barney’s 4th District.

Never assume that a Rep. is in a “can’t lose” district! We need to be fighting hard in every congressional district! Even if we don’t win in this election it sets a stronger foundation for the next election.

The Republican candidates who are running in the Sept 14 Massachusetts Primary for Barney’s seat are:

Earl Sholley http://sholleyforcongress.us/

Sean Bielat http://seanbielat.org/

Vote Barney Frank out of office in 2010!

wren on August 18, 2010 at 4:43 PM

It’s a trap.

Dominion on August 18, 2010 at 2:08 PM

I love this line. It will endure, much like “pull my finger”.

Always appropriate.

BobMbx on August 18, 2010 at 5:04 PM

Mr. Frankenbutt has merely acquired the evidence he needs to justify his “the imploding economy wasn’t my fault” campaign speech.

“See…watch the video…I called for the closure of Fannie and Freddie”

With the short memory capability of most libs…its a sure winner.

BobMbx on August 18, 2010 at 5:07 PM

HE IS LYING THROUGH HIS TEETH.

lilium on August 18, 2010 at 5:44 PM

Can’t get through this video as I repeatedly crap myself at
the 18 second point.

elderberry on August 18, 2010 at 5:45 PM

I’m all for the demise of Fred and Fan but ONLY after Frank and Dodd are arrested, tried, convicted and sentenced to a long term sentence, to be served in a “real” prison and not some plush, half-way house.

steelman on August 18, 2010 at 5:47 PM

My, how the worm has turned. He must see a better way to control where people live. Can’t have us making those decisions ourselves. Of course, with more unemployed or illegals getting citizenship, he needs to create more ghettos for them to live in.

Kissmygrits on August 18, 2010 at 6:40 PM

I wish Barney had felt this way for the last 15 years.

He is quite late to the game with this epiphany.

molonlabe28 on August 18, 2010 at 7:00 PM

I cannot stand the sound of his voice. It’s like nails on a chalk board. I despise his voice more than that of Obama’s if that’s even possible. This bastard defended F&F till the biter end and now claims otherwise. WTF is wrong with the voters in his district in Mass.?

Yakko77 on August 18, 2010 at 9:09 PM

I’m not sure where you get your info, but Section 8 is alive and kicking. Section 8 Housing Vouchers

As late as 2002, I was working for a company that did screenings for apartment renters and Section 8 was a big part of the program.

Common Sense on August 18, 2010 at 3:34 PM

Voucher are still around, but Barney’s friends got rich building apartments with what was called “project-based” Section 8 subsidies. These were direct subsidies to developers and then continuing operating subsidies to keep the rents affordable for low-income people. The developers then syndicated the buildings to investors who wanted a share of the tax writeoffs. It was basically a license to print money if you could land one or two of those deals, and almost all of them were parceled out by HUD political appointees to politically connected Democratic developers, many of whom were based in Boston. (I know all of this because I used to work for the trade association of all these developers and their financing groups who did the syndications.)

The project-based Section 8 program was out of control when Reagan took office, so he killed it and converted the rent subsidy money to housing vouchers that go with the tenant instead of to the building owner. There are still some scammers scamming the voucher program, but it’s nothing like the industrial-size corruption that went on with the project-based subsidies.

Many of the Section 8 guys went on to do other projects using the Low Income Housing Tax Credit, which got a lot of apartments built in the 80s and 90s but isn’t nearly as lucrative for the developers. The tax credits are distributed to the states according to a formula so there isn’t any political mischief in who gets the credits and where the housing gets built. Other projects got done with below-market financing from Fannie and Freddie.

Barney’s committee just approved a bill that would resurrect the old Section 8 program with a new name. Hold on to your wallets if that passes.

rockmom on August 18, 2010 at 9:24 PM

Barney’s committee just approved a bill that would resurrect the old Section 8 program with a new name. Hold on to your wallets if that passes.

rockmom on August 18, 2010 at 9:24 PM

Ahh. Looks like this could be a little gift for Valerie Jarret who needs another Grove Parc Plaza. Anybody seen Tony Rezko?

TN Mom on August 18, 2010 at 10:00 PM

… and Barack Obama paints himself as a deficit hawk. For those gullible enough to believe them.

waelse1 on August 19, 2010 at 12:16 AM

Comment pages: 1 2