Republicans blast FHFA plan to restart contributions to housing trust fund

Congressional Republicans on Thursday blasted a plan by a top housing regulator to restart contributions to a housing trust fund.

Mel WattMelvin (Mel) Luther WattFannie Mae and Freddie Mac reform should put American taxpayers first Watchdog: Former Rep. Mel Watt attempted to 'coerce' employee into relationship Budding housing crisis must be nipped now MORE, director of the Federal Housing Finance Agency (FHFA), sent letters to Fannie Mae and Freddie Mac asking the entities to begin setting aside and allocating funds to the Housing Trust Fund and the Capital Magnet Fund, reversing a six-year suspension of payments.

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House Financial Services Committee Chairman Jeb HensarlingThomas (Jeb) Jeb HensarlingHas Congress lost the ability or the will to pass a unanimous bipartisan small business bill? Maxine Waters is the Wall Street sheriff the people deserve Ex-GOP congressman heads to investment bank MORE (R-Texas) said Watt "is making a grave mistake that harms hardworking taxpayers and violates both the letter and spirit of the law."

He accused Watt of timing the decision for the end of the 113th Congress "in a transparent effort to evade scrutiny and frustrate congressional oversight."

He vowed to call Watt to testify in early January to discuss the issue.

"Diverting assets to housing trust funds instead of repaying taxpayers or stabilizing Fannie and Freddie’s finances only makes matters worse," Hensarling said.

"Director Watt’s decision to activate the Fannie and Freddie slush fund may be an early Christmas present for Acorn-like, liberal housing activists, but it’s a lump of coal in the stocking of every American taxpayer.”

In his explanation, Watt said that while the profit levels of Fannie and Freddie have experienced since 2012 "are not expected to be sustainable" there are reasonable projections that the entitiies "will remain profitable for the foreseeable future."

In November 2008, shortly after the Fannie and Freddie were taken under government control, the FHFA suspended payments to the permanent federal fund that focuses on providing support to states to build and boost the supply of affordable rental housing for extremely low- and very low-income families, including homeless families.

Rep. Randy NeugebauerRobert (Randy) Randolph NeugebauerCordray announces he's leaving consumer bureau, promotes aide to deputy director GOP eager for Trump shake-up at consumer bureau Lobbying World MORE (R-Texas), chairman of the House Financial Services Subcommittee on Housing and Insurance, said he was "outraged" at Watt's decision and said the "timing could not be more suspect."

"Recent history should serve as a reminder that failed government housing policy can have catastrophic consequences for hardworking American taxpayers and the overall health of our economy," he said.

This is déjà vu all over again. Director Watt may have forgotten the path of destruction left by the GSEs, but the American people have not."

Fannie and Freddie needed about $190 billion to stay afloat during the financial crisis. Congress has yet to agree on a plan that would bring them out of conservatorship and reduce the risk for taxpayers.

"Contrary to what Fannie and Freddie apologists claim, the GSEs have yet to repay any of the taxpayer-funded bailout funds they received, which makes today's announcement by the FHFA outrageous. Money coming in from the GSEs should go to the taxpayers instead of a slush fund for ideological housing groups to play around with," said Rep. Ed RoyceEdward (Ed) Randall RoyceMystery surrounds elusive sanctions on Russia Hillicon Valley: Lawmakers struggle to understand Facebook's Libra project | EU hits Amazon with antitrust probe | New cybersecurity concerns over census | Robocall, election security bills head to House floor | Privacy questions over FaceApp House panel advances bill to protect elections from foreign interference MORE (R-Calif.), a member of the Financial Services panel who has worked on the issue. 

Sen. Bob CorkerRobert (Bob) Phillips CorkerTrump announces, endorses ambassador to Japan's Tennessee Senate bid Meet the key Senate player in GOP fight over Saudi Arabia Trump says he's 'very happy' some GOP senators have 'gone on to greener pastures' MORE (R-Tenn.), a member of the Senate Banking Committee, called the decision “beyond irresponsible to restart these affordable housing allocations without first dealing with the underlying problems at Fannie Mae and Freddie Mac."

"These two entities would not be generating one penny of revenue without taxpayer backing, and until the American taxpayers are taken off the hook for a future bailout, FHFA should continue to suspend payments to these funds," Corker said. 

But Democrats said it is time to take steps to help families in need. 

Rep. Maxine WatersMaxine Moore WatersBipartisan housing finance reform on the road less taken Manufacturing group leads coalition to urge Congress to reauthorize Ex-Im Bank Democrats' impeachment message leads to plenty of head-scratching MORE (D-Calif.), ranking member of the House Financial Services Committee and co-author of legislation that created the fund, praised the announcement

"In the richest country in the world, it is unconscionable that there are 7.1 million American households for whom safe and decent housing is neither affordable nor available," she said.  

By allocating a tiny percentage of Fannie Mae and Freddie Mac’s profits to these funds, we have the chance to improve the lives of millions of American children, families, people with disabilities and the elderly."

Several Democractic senators — Jack ReedJohn (Jack) Francis ReedHillicon Valley: Zuckerberg to meet with lawmakers | Big tech defends efforts against online extremism | Trump attends secretive Silicon Valley fundraiser | Omar urges Twitter to take action against Trump tweet Senate Democrats introduce legislation to limit foreign interference in elections House rejects GOP motion on replacing Pentagon funding used on border wall MORE (R.I.), Barbara BoxerBarbara Levy BoxerHillicon Valley: Ocasio-Cortez clashes with former Dem senator over gig worker bill | Software engineer indicted over Capital One breach | Lawmakers push Amazon to remove unsafe products Ocasio-Cortez blasts former Dem senator for helping Lyft fight gig worker bill Only four Dem senators have endorsed 2020 candidates MORE (Calif.), Elizabeth WarrenElizabeth Ann WarrenBiden lead shrinks, Sanders and Warren close gap: poll Defense bill talks set to start amid wall fight Biden allies: Warren is taking a bite out of his electability argument MORE (Mass.) and Bernie SandersBernie SandersBiden lead shrinks, Sanders and Warren close gap: poll Biden allies: Warren is taking a bite out of his electability argument Overnight Health Care — Presented by Partnership for America's Health Care Future — Pelosi set to unveil drug price plan | Abortion rate in US hits lowest level since Roe v. Wade | Dems threaten to subpoena Juul MORE (I-Vt.) — called the  move "a smart step toward strengthening our economy and increasing the supply of affordable rental housing across the country."

"It will allow more renters to find the homes they need at prices they can afford and will help with economic development initiatives in low income or rural areas,” Reed said.

Housing and Urban Development (HUD) Secretary Julián Castro hailed the decision and said it "will help people across the nation secure a decent place to call home."

"This effort will assist individuals from all backgrounds — including low-income families and those experiencing homelessness — in building better lives."

He said HUD will soon issue regulations to implement the trust fund.

This story was updated at 3:15 p.m.