Following confirmation Friday that the Federal Housing Administration (FHA) will require a $1.7 billion infusion from the U.S. Treasury, the House Financial Services Committee expressed its disappointment that the federal entity would need a taxpayer bailout.
With the announcement arriving near the five-year anniversary of the Wall Street bailouts, Committee Chairman Jeb Hensarling (R-TX) pointed much of his dissatisfaction toward the Obama Administration.
“As Americans approach the five-year anniversary of the Wall Street bailouts that were forced on hardworking taxpayers, the Obama administration’s mismanagement of the economy took a new but predictable turn today with the confirmation that taxpayers will now have to bailout yet another failed Washington housing program, the FHA,” Hensarling said in a statement Friday.
The $1.7 billion figure is nearly twice as much as the agency estimated in April when it projected a shortfall of $943 million.
In light of the FHA bailout announcement, the Committee stressed the need for housing finance reform, specifically advocating for reforms found in the Protecting American Taxpayers and Homeowners (PATH) Act.
The PATH Act calls for phasing out government-sponsored enterprises Fannie Mae and Freddie Mac, while also increasing competition by ending the federal government’s role in the housing finance market.
“The FHA is clearly headed toward financial disaster and taking taxpayers along for the ride,” said Hensarling. “Unless Congress enacts sustainable housing finance reform, it’s possible taxpayers will be forced to write blank bailout checks to the FHA indefinitely. That is unacceptable, and it is further evidence Congress needs to pass sustainable housing finance reforms found in the PATH Act.”
Written by Jason Oliva