Enzi Votes Against Housing Bail Out - Again

Press Release

Enzi Votes Against Housing Bail Out - Again

Today the U.S. Senate took action that opens the door for a bill that will protect certain 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 Senate voted 83-9 to move forward on a housing bail out package today. Enzi voted against moving forward and spoke to his colleagues on the Senate floor about his opposition to the bill.

"Some banks and speculators expect Congress to reward their irresponsible behavior with a taxpayer bailout. They expect the federal government to turn their backs on responsible lenders and borrowers, and renters waiting to become first-time homeowners, and support those groups that have pushed our housing market into decline with bad loans and bad investments. This bill is a federal government bailout and that is why I oppose it," said Enzi, a senior member of the Senate Banking Committee.

Enzi was one of nine senators 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 noted that there are several tax provisions in the bill that are important to Wyoming, and the nation. Currently, Wyoming receives approximately $2 million per year in low-income housing tax credits to encourage developers and contractors to develop affordable rental housing projects. This bill would provide a temporary two-year increase of approximately $50,500 - a 2.5 percent increase - to the Wyoming Community Development Authority. It will also increase access to the Mortgage Revenue Bond program, another helpful tool for Wyoming housing infrastructure development.

"Unfortunately, the good provisions of this legislation are not enough to outweigh the bad ones. Pushing liability onto the federal government by bailing our irresponsible lenders and investors is not good government, and I cannot support a bill that puts reckless investors and lenders ahead of hardworking Wyoming taxpayers," said Enzi.

Earlier this year Enzi voted against another housing ‘bail out', the 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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