Enzi Votes Against Housing Bail Out

Press Release

Enzi Votes Against Housing Bail Out

Today the Senate Banking Committee took action that, unless stopped in the full Senate, will protect bad lenders and those who made poor financial decisions at the expense of Wyoming taxpayers, according to U.S. Senator Mike Enzi, R-Wyo. The Banking Committee passed a housing bail out package today.

"The federal government should not be in the business of bailing out bad investments. This bail out comes at the expense of all taxpayers regardless of whether they were at fault for the housing crisis," said Enzi, a senior member of the Senate Banking Committee.

Enzi was one of two senators on the Banking Committee to vote against the package. Enzi does not support a federal bail out.

The bill, the Federal Housing Finance Regulatory Reform Act of 2008, would create a new program within the Federal Housing Administration (FHA) to allow banks holding a volatile mortgage to reduce the principle on that mortgage by 10 percent and convert it to a 30-year fixed-rate term. In exchange, the FHA would then insure the loan against foreclosure.

Enzi said this plan gives lenders a path to rid themselves of their worst loans by transferring the risk of foreclosure to the federal government and the nation's taxpayers. The plan would insure $300 billion of the worst loans held by lenders today.

"Insuring the worst loans in the nation is not a sound way to encourage responsible real estate purchases. It actually entices the banks and borrowers to take on bad loans knowing the federal government will be there to step in and take over the bad debt," said Enzi.

Enzi filed two amendments to the legislation. His first amendment was accepted to the bill and would prohibit the FHA from insuring any loan in which the borrower falsified documents, income, etc., in order to qualify. Enzi's second amendment, which would help limit the FHA from guaranteeing the worst of these home loans, was not accepted.

"The amendment accepted to this legislation will help limit the extent of this new program but the best thing to help our economy and the U.S. taxpayer is to prevent the program from ever becoming law," said Enzi.

Last month Enzi voted against another housing ‘bail out'. Enzi voted against the Senate passed Foreclosure Prevention Act of 2008 because it meant billions of taxpayer dollars would be spent to rescue those who made bad business decisions. Enzi denounced the passage of a "quick-fix" housing stimulus package and urged Congress to instead focus on long-term market solutions to provide relief for the nation's ailing housing industry.

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