Corporate Welfare

Why Is Barney Frank Opposed to Affordable Housing?

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Barny Frank wants to prevent poor people from owning homes.

Calculated Risk picks up on an important, valuable trend: Market interventionists no longer disguise their goal of propping up excessive real estate prices.

Rep. Barney Frank (D-Massachusetts) leads the cheer with this explanation of why it's good that Federal Housing Administration is intentionally guaranteeing bad loans: "I don't think it's a bad thing that the bad loans occurred. It was an effort to keep prices from falling too fast. That's a policy."

Sadly, the evidence is as clear in their actions as it is in their words. From CR's wrapup:

 The FHA insuring "bad loans" for buyers with a high probability of default.

 The first-time home buyer tax credit (the FTHB makes no sense from any other economic perspective).

 Delaying foreclosures, first with moratoriums and then with "trial modifications".

We could probably include the Fed buying GSE MBS to lower mortgage rates, and other policies like increasing the "conforming loan" limit to $729,750 in high cost states.

Intentionally encouraging loans with high default rates (insured at taxpayer expense), and the FTHB tax credit (especially allowing buyers to use the credit as a down payment) have stimulated demand. And delaying foreclosures has restricted supply.

This has had the desired effect of pushing up asset prices, especially at the low end.

It is "a policy", but is it a good policy?

You may have your own answer to that rhetorical question. But at least Frank and other inflationists are describing the policy overtly, without pettifogging about working families and how foreclosures hurt neighborhoods. They just want to keep real estate prices up. It goes no deeper than that.

As noted the other day, real estate life support is more than just a soaking of taxpayers. It's an actual class war, with a clear set of beneficiaries (homeowners, and in particular "homeowners" with heavy debt loads) and a clear set of victims (home buyers). I don't have a lot of confidence in home buyers as a group capable of getting a political voice. But at least the argument is out in the open.

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  1. Q: “Why Is Barney Frank Opposed to Affordable Housing?”

    A: Because he hates America.

  2. Any negative consequences of this will be “market failure” due to “deregulation”.

    1. inherited from the Bush administration

  3. You Rethugs don’t even try to hide your homophobia anymore.Like you care about affordable housing with your opposition to rent control,section 8 vouchers, and new public housing construction.

    1. That is not affordable housing, it is simply transferring the costs from one person who has political support to someone else who does not. And often these deals increase the total cost of housing.

    2. Rent control works wonders. See what it did in NYC? Very affordable housing there.

  4. ProgressiveSteve if you are parodying a troll that is hilarious. Actually it’s hilarious if you’re serious too.

    1. You mean criticizing Barney Frank isn’t homophobic in the same way as disagreeing with Obama is racist?

      1. That comment was both homophobic and racist. The Department of Psychiatric Reprogramming is on their way to your house now…

        …and hide your dog or they’ll shoot it.

          1. Excellent choice.

            1. WOW! BF is down with Benelli semi-autos? Almost a redeeming quality πŸ˜‰

  5. You mean criticizing Barney Frank isn’t homophobic in the same way as disagreeing with Obama is racist?

    No, it’s totally homophobic. AND racist.

    Only fascists are opposed to continuing massive government intervention that is intended to somehow both continue and fix the results of previous massive governmental interventionist fuckups.

    1. Oh wow! I had no idea what a bad girl I am πŸ˜‰

    2. Only fascists are opposed to continuing massivegovernmentintervention that is intended to somehow both continue and fix the results of previous massivegovernmentalinterventionistfuckups.

      FTFY

  6. Happy Columbus Day everybody!

    1. That’s racist.

      1. Better be nice. The Europeans have steel, the natives don’t.

        1. True, but my Toledo sword didn’t stop them from enslaving me.

  7. Don’t pay now and don’t pay later is going to working workout splendidly. I don’t know what you are talking about.

  8. This kind of thing is morally and economically questionable, but from a policy point of view not entirely crazy. High debt loads and plummeting property prices lead to negative equity, which leads to illiquid housing markets and poor labor mobility.

  9. There is another class of clear beneficiaries: banks and credit unions. As real estate prices fall, a lot of people who can afford to pay their mortgage opt not to bec. the value of the property is so much less than the mortgage. Frank and friends are pretty keen to help flailing financial institutions in the hopes that they (the FIs) might start lending again. Of course, as a renter, I’m pretty disgusted with the whole thing.

  10. Intentionally encouraging loans with high default rates …

    Why is this called “predatory lending” when anybody but Barney Frank does it?

  11. Like you care about affordable housing with your opposition to rent control,

    Because those jurisdictions with rent control are just chock full of affordable housing.

    section 8 vouchers, and new public housing construction.

    Ahh, public housing. A triumph of the welfare state.

    This kind of thing is morally and economically questionable, but from a policy point of view not entirely crazy. High debt loads and plummeting property prices lead to negative equity, which leads to illiquid housing markets and poor labor mobility.

    So which do we want? Affordable housing, or artificially supported house prices?

    The losses in the housing market are going to be taken by somebody, somewhere. I vote for the people who own and loaned on the underwater houses, as opposed to those who did not.

  12. Bring on the helicopters!

  13. I vote for the people who own and loaned on the underwater houses, as opposed to those who did not.

    Racist/fascist/homophobe!

  14. So which do we want? Affordable housing, or artificially supported house prices?

    Yes. Next question?

  15. I know, JW. The goal here is taxpayer-supported housing prices and taxpayer-supported subsidies for housing.

    Everybody wins!

  16. I WANT MY FUCKING PONY!!1

  17. “The goal here is taxpayer-supported housing health care prices and taxpayer-supported subsidies for housing health care.”

    Next: energy prices.

  18. 2/3 of Americans own homes. The feds are unjustly propping up the price of homes. What is so surprising about that?

  19. If you own your home because it is your primary residence, the fluctuations in the market every few years shouldn’t matter to you. It matters a great deal to banks though.

  20. There will be no reform as long as people like Frank are still in office.

    The guy deserves to be hung, but people can’t even have the sense to recall him. The system is broke and isn’t getting fixed.

  21. Ironically, by simultaneously propping up housing prices AND pushing banks to loosen loan terms, they are actually saddling the poorest people with mountains of unnecessary debt and banks with mountains of bad loans. It’s a lose-lose situation.

    If they just let housing prices fall, more people would be able to afford these houses without borrowing extra money to pay for them.

    Who benefits from keeping housing prices high and simultaneously lending more money to buy them?

  22. Who benefits from keeping housing prices high and simultaneously lending more money to buy them?

    Barney Frank.

    Do you know what hair-lipped righteous indignation is going for these days? It’s not cheap, lady, I’ll tell you that. What planet have you been living on to not know this?

  23. Another issue:

    If someone feels that the government imposes to high a tax burden in the form of the income tax, is it ethical for them to take a credit they feel is an attempt to interfere in the market place?

  24. It’s impressive how Barney Frank has the rare redeeming traits of supporting marijuana and online gambling legalization, and yet still manages to be one of the most worthless fuckers in Congress. That’s talent.

    1. I think that is appeasing Leftoid, not quite ‘talent.’ πŸ˜‰

  25. Over and over Barney, Dodd, and the Dems voted to keep the sub-prime mortgages going. When the housing market went in the toilet, they blamed Bush. Barney gets millions from Fannie and Freddie when he is suppose to be regulated the housing market. He even got his “husband” a job as an executive with them. Keep drinking the the Kool-aid you commie idiots.

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