Downsizing Blog

The Federal Housing Administration (FHA)’s 2012 audit confirmed what has been obvious for some time: FHA is deeply underwater, with a negative economic value of $34 billion. With over $1 trillion in mortgages backed by FHA, even minor changes in the housing market could add tens of billions to that total. A taxpayer bailout is inevitable.

House Oversight and Government Reform Committee chairman Darrell Issa (R-CA) released a report today on failed mortgage company Countrywide’s use of a VIP loan program to curry favor with Beltway decision-makers. Members of Congress, congressional staffers, and cabinet officials received preferential treatment – including rate discounts and fee waivers – from Countrywide.

The Community Development Block Grant program is a perfect example of the blurring of responsibility between the federal government and the states. The program’s roots go back to the Great Society and the wishful belief that the problems of urban Americans could be solved with handouts from Washington. Instead, the program “has degenerated into a federal slush fund for pet projects of local politicians and politically connected businesses.”

The Obama campaign is trying to hang so-called “vulture” capitalism around Mitt Romney’s neck, but as two excellent opinion pieces explain, it’s the administration’s crony capitalism that’s the really disturbing story.

House Budget Committee chairman Paul Ryan (R-WI) and Speaker John Boehner (R-OH) are pushing back against criticism from the U.S. Conference of Catholic Bishops over the GOP’s proposed cuts to domestic spending programs. They should.

In his State of the Union address, President Obama let us know that he will be "sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates."

The recently released Federal Reserve White Paper on the Housing Market has received considerable attention, at least for its policy proposals.  I found one of the more interesting pieces of data in the paper to be the number of mortgages with negative equity, reproduced below (Figure 3 in the Fed paper).

If you’re a taxpayer and you like beef jerky, I have good and bad news. The good news is that Jack Link’s is expanding the production facilities at its corporate home in Minong, Wisconsin. The bad news is the expansion is being “made possible” with a $365,000 federal grant to Minong for infrastructure upgrades.

A recent report from the Federal Reserve Bank of New York examines the role of speculators in driving the housing bubble. Setting aside the fact that almost everyone who bought a house was “speculating” to some degree, the researchers focus on those who were buying homes they did not intend to live in.

The House is scheduled to vote this evening on a fiscal 2012 “minibus” packaging of three appropriations bills (Agriculture, Commerce-Justice-Science and Transportation-HUD) agreed to in conference on Monday. It includes a continuing resolution to keep the government funded through December 16^th, thus avoiding a government “shutdown.”