Emergency Housing Pork
By Arnold Kling
Earlier this year, as clouds were already gathering over the GSEs, Congress raised the limit — to almost $730,000 in certain high-cost areas — on the theory that Fannie and Freddie could help unfreeze the housing market. The measure was supposed to be temporary. But the pending Senate and House bills impose permanent increases. The Senate would go up almost 50 percent, to $625,000. The House, led by Speaker Nancy Pelosi (D-Calif.), who represents the pricey San Francisco Bay Area, is considering a $730,000 cap. Either way, Congress would be authorizing the GSEs to pile more risk onto their already staggering balance sheets, and mostly for the benefit of buyers and sellers of expensive houses.
On the business page, they report,
[Congressman Barney] Frank nonetheless was busily shoring up support among liberal Democrats by promising to include nearly $4 billion in grants for communities to purchase foreclosed properties, a top priority for the Congressional Black Caucus.
Whenever Congress does anything in the name of housing, if you take a good whiff, you’ll smell pork.