Among a second set of bills intended to dismantle Fannie Mae and Freddie Mac unveiled by Republican Members of the House Committee on Financial Services late on Friday, May 13, is one that would abolish the National Housing Trust Fund. The bill is sponsored by Representative Ed Royce (R-CA).
Six other bills are in the latest package to come from the Subcommittee on Capital Markets and Government Sponsored Enterprises (GSEs), chaired by Representative Scott Garrett (R-NJ). In a press statement, Mr. Garrett said, “while special interest groups and the guardians of the status quo may not want to admit it, Fannie and Freddie’s days are numbered. It’s not a matter of if, but when – the quicker we begin the process of dismantling them the better off we’ll be.” These bills follow eight bills introduced in March that address particular issues with the GSEs. Having determined they cannot move a comprehensive housing finance reform bill, the House Republicans are attempting to whittle away at the GSEs. All eight of the earlier bills were voted out of Mr. Garrett’s subcommittee on April 6, but have yet to be taken up by the full committee.
The NHTF was created in 2008 in the Housing and Economic Recovery Act (HERA), the last Fannie and Freddie reform bill. The NHTF’s initial funding source was to be contributions from Fannie and Freddie, but the GSEs were taken into conservatorship two months after HERA passed and no contributions were ever made. However, the legislation creating the NHTF did not limit its revenue source to the GSEs. The statute also provides that the NHTF can be funded by other dedicated sources of revenue, such as any appropriations, transfers, or credits that Congress may designate in the future. This part of the bill serves as the basis for the effort to identify other ways of capitalizing the NHTF.
Mr. Royce said of his bill: “As long housing activists are lobbying Congress, there will be a push to finance the Housing Trust Fund. Eliminating this fund is a necessary step in moving beyond the era of crony capitalism that kept the GSEs alive despite their reckless risk-taking.” The press release went on to call the NHTF “nothing more than a slush fund for special interest housing groups.”
The NHTF campaign will send a letter to Mr. Royce and other members of the Financial Services Committee explaining the need for and purpose of the NHTF and objecting to his characterization of the NHTF as a slush fund.
A subcommittee hearing on the new bills is expected to be called during the week of May 20.
To read the press release, go to: http://garrett.house.gov/News/DocumentSingle.aspx?DocumentID=241309