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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 WattOn The Money: Watt's accuser describes sexual harassment claims in stunning testimony | SEC sues Elon Musk for fraud | Mnuchin says GOP hasn’t lost messaging war on taxes Mel Watt's accuser describes sexual harassment claims in stunning testimony On The Money: House passes 4B spending bill to avert shutdown | Trump 'not happy' after Fed's latest rate hike | Trump says he refused meeting with Trudeau 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 HensarlingFed bank regulator walks tightrope on Dodd-Frank Republican McHenry announces bid for Financial Services ranking member Maxine Waters reelected to House seat in California 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 RoyceHistoric class storms Capitol Election Countdown: Florida braces for volatile recount | Counties race to finish machine recount | Trump ramps up attacks | Abrams files new lawsuit in Georgia | 2020 to be new headache for Schumer | Why California counts its ballots so slowly Republicans jockey for top GOP spot on House Foreign Affairs Committee MORE (R-Calif.), a member of the Financial Services panel who has worked on the issue. 

Sen. Bob CorkerRobert (Bob) Phillips CorkerSenators return to Washington intent on action against Saudis Paul Ryan shares video of Mitt Romney dropping by in Washington Senate GOP readies for leadership reshuffle 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 WatersOn The Money: Trump, Senate leaders to huddle on border wall funding | Fed bank regulator walks tightrope on Dodd-Frank | Koch-backed groups blast incentives for corporations after Amazon deal Fed bank regulator walks tightrope on Dodd-Frank Bernie Sanders: 'We have a president who is a racist' 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 ReedStudy: US has spent nearly T on war since 9/11 Overnight Defense — Presented by Raytheon — First lady's office pushes for ouster of national security aide | Trump taps retired general as ambassador to Saudis | Mattis to visit border troops | Record number of female veterans to serve in Congress Midterms poised to shake up US-Saudi defense ties MORE (R.I.), Barbara BoxerBarbara Levy BoxerFox's Ingraham transitioning longtime radio show to podcast Former Dem aide makes first court appearance on charges of posting GOP senators' info online Ex-House intern charged with 'doxing' GOP senators during Kavanaugh hearing MORE (Calif.), Elizabeth WarrenElizabeth Ann WarrenNearly six in ten want someone other than Trump elected president in 2020: poll Schumer reelected as Senate Democratic Leader Merkley seeking to change Oregon law so he can run for president and Senate in 2020: report MORE (Mass.) and Bernie SandersBernard (Bernie) SandersO'Rourke receives invite to visit Iowa from Democratic Party in Des Moines Senators return to Washington intent on action against Saudis Bernie Sanders: 'We have a president who is a racist' 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.