On May 25, the House Financial Services Committee approved a bill that creates a new regulator for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The bill, which was approved by a vote of 65-5, includes a provision requiring both GSEs to set aside 5 percent of their after-tax profits in an Affordable Housing Fund that will be used to expand housing for very low- and extremely low-income families. Chairman Michael Oxley (R-OH) included the provision at least in part to win the support of Democrats for the overall bill. Oxley worked with ranking Democrat Barney Frank as well as Housing and Community Opportunity Subcommittee Chairman Bob Ney (R-OH) in crafting the housing fund provision, called The Federal Housing Finance Reform Act of 2005.
It is estimated that between $400 and $600 million will flow into the fund for the first few years of its existence but that amount may increase to as much as $1 billion annually. Money in the funds can be used to build, preserve and rehabilitate housing that is to be rented or owned and for leveraged grants for unmet housing needs in underserved areas.
But opposition to an affordable housing fund remains. Financial Services Committee member Ed Royce (R-CA) called the provision an “experiment in socialism” and the Wall Street Journal editorial page railed against the idea. An amendment that would have removed the provision creating the Affordable Housing Fund was defeated by a vote of 53-17. It is unclear whether it will remain in the final bill that is passed by the full House, where a letter opposing the Fund has been circulated by Rep. Mike Pence (R-IN) and signed by 34 members.
The fund’s fate is also uncertain in the Senate, where Senate Banking Committee Chairman Richard Shelby opposes the idea. The Senate committee is expected to mark up a bill after the Independence Day recess. Objections from conservatives arise from the notion of the government requiring a business enterprise to set aside part of its profits. However, supporters of the provision point out that Fannie Mae and Freddie Mac are government-sponsored enterprises that were created with the express purpose of meeting the housing needs of the American public. An op-ed placed in the Wall Street Journal, written by the president of the New York Federal Home Loan Bank, refuted some of the claims conservatives have made about the fund. http://www.nhtf.org/pdf/wsj_fhlb.pdf
To learn about the activities being organizing to push for passage of the Affordable Housing Fund, visit the National Housing Trust Fund Campaign at http://www.nhtf.org/.
You can also write to Congress in support of the Affordable Housing Fund using CHN’s email letter at http://www.demaction.org/dia/organizations/chn/campaign.jsp?campaign_KEY=898