The Problem Continues: Now FHA Needs a Bailout
The original cause of what turned into the great meltdown of 2008, Dem social engineering affirmative action home loan mandates, just keeps on tanking the economy. Obama’s monumental failure to implement the only solution to this mess, fiscal conservatism, is enabling things to get worse and worse.
The Fannie and Freddie bailout has ballooned from less than $100 billion to the neighborhood of $400 billion, less than a year later, with no end in sight.
Now the agency that took over the job of enabling subprime loans, the FHA, is asking for a bailout of $54 billion, which could become much larger.
Some details:
A huge, government-run housing agency shows massive losses and needs a bailout. Fannie Mae? Freddie Mac? No. It’s the Federal Housing Administration, in a bad case of financial-meltdown deja vu.
The FHA, which insures mortgages made by first-time buyers with low down payments, says it may need a bailout because it will have losses of — get this — $54 billion. And how did it lose all that? By backing home loans made to people who couldn’t pay them off.
Where have we heard this before?
At a time when we talk routinely of trillion dollar deficits, $54 billion may not seem like much. But it’s huge. Worse, it signals that the government, contrary to its repeated assertions of fiscal competence, is incapable of learning from its worst mistakes.
In the case of the FHA, as the Los Angeles Times notes, it doubled down on its bad bet. “This year alone,” the Times found, “the agency has backed nearly 2 million mortgages worth at least $328 billion.
Those who think that there are people inside our government who are bound and determined to take the economy down will consider adding FHA’s obviously deliberate move to take on new amounts of virtually guaranteed losses to their dossier.
Since the present administration seems to want to distract from the real cause of all this by blaming their political enemies, no solution is yet in sight.
When the cause remains the same, you will keep on getting the same effect.
