Congress Seeks to Loosen Standards on Mortgage Lending

By Steve Murray, REAL Last week several dozen Democratic members of the House of Representatives signed and sent a letter to Messrs. Geithner and Bernanke asking them to appoint someone new to run FHFA, the Federal entity that oversees Fannie and Freddie.  They did so because Edward DeMarco, who now runs it, is focusing on his mandate which is to protect the American taxpayer from further losses at the GSE’s.  He sees his mandate as doing just that and not on loosening standards to stimulate the housing market.Now Congress has the right to change the mandate should they desire to do so.  But that would take discussion and a vote of some kind.  Or perhaps the President could just change the regulations.  But as we commented last week there is a movement afoot to force FHFA along with the GSE’s to loosen standards to stimulate housing sales.  You know, the kind of lending that got us here in the first place.

Should we want to use the GSE’s to stimulate housing sales (and therefore it is thought the economy) then let’s have Congress and the President work together and announce that this is what they want – and stop this behind the scenes politicking (back stabbing) that is going on now.  Remember that it was several member of Congress that protected the GSE’s from 1995-2007 that drove us to where we are today.  And the main participants in those past efforts are nowhere to be found today.