— Bailout of mortgage debts needs attention
(The Free Press – Mankato, Minn.)
With lots of news coverage and focus on the "fiscal cliff" in Washington, other large debt concerns seem to be escaping the attention of Congress and the president.
The quasi-government agencies Freddie Mac and Fannie Mae remain $140 billion in debt to U.S. taxpayers. That's bailout money borrowed by the agencies to stem their huge mortgage losses in 2008. The losses stemmed from loans extended to people who either weren't qualified, bought more house than they could afford or otherwise defaulted.
The $140 billion owed taxpayers is equivalent to the stock market capitalizations of Kellogg Co., McDonald's and Starbucks combined, according to financial analyst Joshua Rosner, who wrote an opinion piece on the problem for The New York Times.
Rosner asserts that Congress has a bipartisan approach to the problem: Do nothing.
That bipartisan approach most likely stems from the fact that both parties are to blame for the problem. The so called government-sponsored enterprises are stock corporations just like Apple and Google, but they have long been supported, some might say subsidized, by U.S. taxpayers. They made mortgages more affordable to people who might not be able to get them through the private mortgage market.
In the 1990s, things were going well. The agencies were making lots of loans and lots of profits. The Clinton administration then added gasoline to the fire by easing lending standards. When some members of Congress tried to correct that overreach and make the standards tougher again, they were apparently stymied, according to Rosner, by the Bush administration.
Of all the banks and insurance companies bailed out in 2008, most have paid back large portions of their government loans. But the government has only received interest payments from Freddie and Fannie. Then the U.S. changed its policy by taking only profits from the two as payback, according to Rosner.
There were several warning signs that the housing bubble was going to burst. Experts on financial markets in Congress should have known better.
Now, the problem of government involvement in the mortgage market appears to be growing even bigger with the Federal Housing Administration reporting losses of $16.3 billion recently. The federal agency was planning to raise its mortgage insurance rates and sell off bad loans to recoup the losses, with the hope it wouldn't have to come to taxpayers.
The problems at the mortgage lending agencies have renewed some calls in Congress, mostly among Republicans, to shrink the influence the government has in the mortgage market. The three agencies guarantee more than 90 percent of U.S. home loans, according to a report by Bloomberg News.
For a government agency to be at risk and to control that much of the mortgage market seems extremely hazardous to taxpayers' wallet.
Congress and the president have their work cut out for them to not only somehow reasonably get taxpayers' money back, but reduce the risk taxpayers are facing in the volatile housing mortgage market.
Election is over; time for nation to come together
(The Tribune-Democrat – Johnsrown, Pa.)
We believed Mitt Romney was the best person to lead our country and help solve its problems over the next four years. We said so in our editorial endorsement.
But after a long, bitter and hard-fought campaign, our nation voted on Nov. 6 in a democratic election to re-elect Barack Obama.
It’s now time for the divisiveness to end – in the halls of Congress and in the neighborhoods of America – and for all of us to come together and make this country strong and prosperous once more.
In his victory speech, President Obama said, in part, “You elected us to focus on your jobs, not ours. And in the coming weeks and months, I am looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together.
“Reducing our deficit. Reforming our tax code. Fixing our immigration system. Freeing ourselves from foreign oil. We’ve got more work to do.”
Indeed we do.
In reflecting a day after the election, Republican Speaker of the House John Boehner said, “The American people re-elected the president, and re-elected our majority in the House. If there is a mandate, it is a mandate for both parties to find common ground and take steps together to help our economy grow and create jobs, which is critical to solving our debt.”
Again, we couldn’t agree more.
Yet a month after the votes were counted, we’re still not seeing Democrats and Republicans in Washington come together. What don’t they understand?
More importantly, when will they get it?
... The president’s plan is to increase taxes on the wealthiest Americans and to provide tax credits to small businesses that add jobs or increase wages.
The Republicans want a solution based on spending cuts. Until recently, they were solid about not increasing taxes, something we’ve agreed upon. Some are now reneging. Maybe that’s a sign of compromise. We hope so.