Rep. Scott Garrett (R-NJ), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, issued the following statement today after an independent audit of the Federal Housing Administration (FHA) revealed that the housing agency's cash reserves are down 45% from last year and the "chance that future net losses on the current, outstanding portfolio could exceed current capital resources is close to 50 percent," which could necessitate a taxpayer bailout next year:
"This is what happens when the federal government meddles in economic affairs best left to the private market. Because the federal government has played an outsized role in our country's housing system, the American taxpayers are now at risk of another costly bailout that will put future generations even deeper into debt. Today's report shows that FHA is overleveraged at a shockingly high rate of 400 to 1, making Lehman Brothers and Bear Stearns, the poster children of the 2008 financial collapse, look like financially solvent institutions. The FHA audit proves once again that, if left unchanged, the reckless policies currently guiding our nation's housing finance system will threaten the financial solvency of the United States of America.
"In light of this bleak outlook for the FHA, it makes no sense to increase the size of the loans the FHA can insure. With the potential for tens of billions of dollars in taxpayer losses, it is unconscionable to be even considering raising the conforming loan limit so that the American taxpayers can insure the mortgages for million dollar homes."