Michele Bachmann - Housing Crisis
Amendment to FHA Stabilization Act
In May of 2008, Congresswoman Bachmann released a statement noting an amendment that she had introduced to close a loophole that would leave taxpayers open to liability.
Bachmann Offers Amendment to Housing Bill
Compromise Helps Homeowners and TaxpayersWashington, D.C., May 1, 2008 -
Yesterday, Congresswoman Michele Bachmann (R-MN), a member of the House Financial Services Committee, introduced an amendment to the FHA Housing Stabilization and Homeownership Retention Act (H.R. 5830), designed to close a serious loophole that would expose taxpayers to tremendous risk.
“Without amendment, this legislation invites widespread abuse. Lenders will continue to make loans they would otherwise deem too risky because if things fall through the bill simply gets mailed to the American taxpayer,” said Bachmann. “My amendment would put standards and penalties in place to discourage lenders from treating the American people like an ATM to absorb their financial risk.”
As written, the FHA bill creates incentives for lenders to make high-risk loans knowing taxpayers will shoulder the cost of any defaulted payments. Bachmann’s amendment would require the oversight board created in this bill to enforce specific standards protecting taxpayers from underwriting this high-risk behavior.
“The 95% of the taxpayers in this country paying their loans on time have been asked to pick up the tab for the 5% who have made questionable decisions,” said Bachmann. “The very least we can do is shield already overburdened taxpayers from the manipulation of this new taxpayer fund.”
Last night the amendment failed along a party-line vote, 36-33.
Opposition to FHA Housing Stabilization Act of 2008
In May of 2008, Congresswoman Bachmann released a statement noting her opposition to the FHA Housing Stabilization and Homeownership Retention Act of 2008.
Bachmann Fights for Homeowners, Taxpayers
Takes Stand Against Irresponsible LegislationWashington, D.C., May 8, 2008 -
Today, Congresswoman Bachmann released the following statement about the FHA Housing Stabilization and Homeownership Retention Act of 2008 (H.R. 5830), a bill that would penalize American homeowners and taxpayers:
"I, too, am deeply concerned about the current mortgage mess. It’s not only deeply troubling that so many Americans are feeling the personal pinch, but also that the overall economy is so deeply impacted. Unfortunately, the Housing Omnibus Bill before the House today is a deeply flawed package that will help lenders and lawyers while hurting American homeowners.
Housing Stabilization and Homeownership Retention Act of 2008(H.R. 5830), which would penalize American homeowners for acting responsibly:"I, too, am deeply concerned about the current mortgage mess. It’s not only deeply troubling that so many Americans are feeling the personal pinch, but also that the overall economy is so deeply impacted. Unfortunately, the Housing Omnibus Bill before the House today is a deeply flawed package that will help lenders and lawyers while hurting American homeowners.
"The bill even includes a $35 million dollar slush fund for trial lawyers. And according to the Congressional Budget Office, the bill would help refinance the loans of only 500,000 people – less than 1% of homeowners – at the expense of the 51 million homeowners who pay their loans on time, however much they may be hard-pressed to do so."The bill is so broad that homeowners covered could deliberately default on their loans to cash-in on the taxpayer bail-out. In others words, a taxpaying single mother working extra hours to pay her mortgage on time could be asked to help pay the loans of someone who intentionally defaulted.
"Lenders and servicers can game the system as well. The bill invites them to cherry-pick only their worst loans to dump onto American taxpayers – including loans people secured through outright fraud. I offered an amendment in the Financial Services Committee which would have put oversight standards in place to prevent this abuse – unfortunately, it was defeated along party lines.
"Americans need real solutions to the foreclosure situation. But, this bill just makes matters worse – and penalizes responsible homeowners in the process."
American Housing Rescue and Foreclosure Prevention Act of 2008
In July of 2008 Congresswoman Bachmann released a statement noting her opposition to the American Housing Rescue and Foreclosure Prevention Act of 2008.
Housing Bill Puts Innocent Taxpayers on the Hook
Bachmann Opposes Misguided Bail-Out BillWashington, D.C., Jul 23, 2008 - Today, U.S. Representative Michele Bachmann (MN-6), a member of the House Financial Services Committee, released the following statement upon consideration of H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act of 2008, which passed the House today:
“This bail-out housing bill misses the mark and does nothing to address the foreclosure problems our nation is currently facing. Instead of making it easier for America’s hard working taxpayers to make their monthly mortgage, H.R. 3221 forces them to pay more to fund a misguided, massive housing program. At a time when so many families are struggling to pay skyrocketing food and gas costs, the last thing they need is another bill from Washington.
“H.R. 3221 rewards irresponsible lenders and borrowers and nullifies any consequences that could keep this behavior from being repeated. It hoists a massive federal program on Fannie Mae and Freddie Mac, forcing them – already in a precarious financial position – to pay a principal balance of each business purchase made. Thus, it permanently raises taxes on American homebuyers and makes it harder for them to access affordable mortgages when Fannie and Freddie raise their fees to lenders in order to curb these increased costs. And at the same time, the bill gives Fannie and Freddie billions of dollars of taxpayer backing to remain financially stable with no guarantee that they will never again overextend in this same way and require another taxpayer bail-out.
“To add insult to injury, this bill steals the privacy of everyday Americans employed by mortgage companies and real estate agencies, requiring them to submit their fingerprints for a mandatory government registry. With absolutely no safeguards in the legislation to prevent identity theft, this program puts the personal information of thousands of Americans at risk.
“America’s housing market will recover more quickly if Congress doesn’t expand government programs and dramatically increase federal intrusion. Washington should be concerned about helping families that can’t pay their mortgages, but increasing government and taxes doesn’t help them – it hurts them. Congress should truly consider the consequences of this action before it makes matters worse.”
The following day, Congresswoman Bachmann wrote an op-ed on the subject and appeared on Fox Business to discuss her oppositon to the legislation.
Fox Business Appearance
In July of 2008, Congresswoman Bachmann appeared on Fox Business and spoke about the possible bail out of Fannie-Mae and Freddie Mac.
Fannie Mae and Freddie Mac
In July of 2008, Congresswoman Bachmann released a statement calling for prudence in determining whether or not Fannie Mae and Freddie Mac should be assisted.
Bachmann Statement on Fannie Mae and Freddie Mac
Washington, D.C., Jul 15, 2008 -
(Washington, DC) Today, U.S. Representative Michele Bachmann (MN-6), a member of the House Financial Services Committee, released the following statement in response to the financial instability of Fannie Mae and Freddie Mac:
"While the mortgage market is already precariously balanced and this added instability is cause for concern, it is imperative that Congress wait and examine all the facts before jumping in to assist Fannie Mae and Freddie Mac. Far too often, the government over-reacts and involves itself in market matters, preventing the free market from correcting itself and making things much worse.
"It is important that before legislation is considered, Washington carefully looks into the financial situation of Fannie and Freddie. We must ensure that our nation’s taxpayers, who are already struggling because of skyrocketing food and gas costs, are not left shouldering an increased burden due to a massive bail-out bill. We must balance that with care that these taxpayers are protected in case this situation leads our economy to take a tumble for the worst."
Floor Speech on Housing Bailout
In July of 2008, Congresswoman Bachmann spoke on the House floor about the bailouts of Fannie-Mae and Freddie-Mac.
Fannie Mae and Freddie Mac Bailout
In September of 2008, Congresswoman Bachmann released a statement on the bailout of Fannie Mae and Freddie Mac.
Bachmann Statement on Fannie Mae and Freddie Mac Bailout
Washington, D.C., Sep 8, 2008 -
Today, U.S. Representative Michele Bachmann (MN-6), a member of the House Financial Services Committee, released the following statement in response to the recent announcement by Treasury Secretary Henry Paulson and Director of the new Federal Housing Finance Agency (FHFA), Jim Lockhart, to create a four part plan to stablilize mortgage giants Fannie Mae and Freddie Mac:
"I am pleased that this new, long-overdue regulator is exercising its authority to quickly ensure the financial soundness of the GSEs and our nation’s overall financial health. I am particularly pleased that the plan appears to provide incremental support, so as not to put taxpayers too far out on a limb. But as I have continually stated, I am still very concerned about the protection of America’s hard-working taxpayers throughout implementation of this plan.
"With American families already struggling to make ends meet because of high food and gas costs, Washington must work to ensure this new GSE plan does not increase their financial burdens and put them on the hook for a multi-billion-dollar bail-out program. We must balance the financial security of our taxpayers with a program that stabilizes Fannie and Freddie, which have a stake in more than half of existing mortgages.
"I strongly support the decision to ask the leaders of Fannie Mae and Freddie Mac to step down from their positions. This ensures a much-needed fresh start for our financial markets and helps erase investors’ lack of confidence in the management of these massive entities.
"Rest assured that I will continue to watch this situation closely and work to see that protection of our nation’s taxpayers remains a top priority during implementation of this program, and particularly in the steps that will follow this shoring up. We must ensure that we do not go through this exercise only to set the same scenario in play again in years to come. Many financial experts predicted this day would come as the GSEs grew in size and scope. Out government must not shore them up this time and fail to put in place the necessary reforms that will keep us from reaching this point again down the road."
Response to RESPA
In September of 2008, Congresswoman Bachmann released a statement noting her opposition to the Real Estate Settlement Practices Act (RESPA) Rule.
Bachmann Statement on HUD's Proposed RESPA Rule
With Financial Markets in Turmoil, Now's Not the Time to Further Complicate Home SettlementsWashington. D.C., Sep 16, 2008 -
Today, U.S. Representative Michele Bachmann (MN-6), a member of the House Financial Services Committee, made the following statement for a Financial Services Subcommittee on Oversight and Investigations Hearing regarding the Housing and Urban Development’s (HUD) proposed Real Estate Settlement Practices Act (RESPA) Rule:
"This proposed rule has been the cause of great concern for many of my constituents – from homebuyers and mortgage bankers to realtors and community bankers. All share similar concerns that HUD’s rule will do more harm than good – that the proposal will only further burden homebuyers with confusing, unnecessarily complicated, and inconsistent terms about their loans and settlement costs. Most agree that this rule will impose serious new costs on the mortgage industry at a time when it is already suffering tremendous turmoil in the housing marketplace."I hold similar concerns and that is why I joined 244 of my colleagues in sending a letter to HUD asking for an additional extension of the comment period for this proposed rule. This would ensure HUD, industry stakeholders and consumers have adequate time to evaluate this proposal. We were successful in securing a thirty day extension and it now remains to be seen what real improvements will be made.
"While HUD has the responsibility to administer RESPA and ensure consumers’ receive good faith disclosures of their closing costs, the Federal Reserve Board has jurisdiction over the Truth in Lending Act (TILA) which governs the terms of mortgage loans. Currently, the Fed is working to update TILA disclosure requirements through what we all know as "Regulation Z." It is unclear why HUD has not more closely worked with the Fed so that these regulatory updates may complement, not clash with, one another.
"We do not yet know what changes have been made to the proposed rule which is currently under examination by the Office of Management and Budget (OMB). However, I believe that through hearings such as today’s we can continue to ease marketplace concerns with the hope that HUD will produce a more cohesive, workable rule that benefits all parties. Our nation is experiencing a period of turmoil in the housing market and perhaps now more than ever, it is imperative that Americans receive full, simplified disclosure of the terms of their real estate settlements."
Fox Business Appearance
In February of 2009, Congresswoman Bachmann appeared on Fox Business and spoke about the possible mortgage cram down legislation and the effect on contract law.
Opposition to "Cramdown" legislation
In March of 2009, Congresswoman Bachmann released a statement noting her opposition to legislation that would allow judges to write down the value of mortgage.
"Cramdown" Bill Creates New Unpredictable Risk and Higher Costs
"This is the last thing our economy needs"Washington, D.C., Mar 5, 2009 - U.S. Representative Michele Bachmann (MN-06), member of the House Financial Services Committee, today issued the following statement upon consideration of H.R. 1106, which would allow bankruptcy judges to rewrite individual mortgages:
“There are responsible homeowners all across America who live within their means, make honest representations on their loan applications, pay their debts, and work hard to achieve the American dream.
“Yet cramdown rewards poor decisions made by a small number of individuals and lenders, while adding uncertainty to the market and increasing mortgage costs for all Americans. Allowing bankruptcy judges to abrogate the terms of a mortgage contract adds substantial risk that a homeowner might choose to file for bankruptcy to shave down the principal they owe. Experts estimate that the additional costs due to this risk could raise mortgage rates by as much as two full percentage points or substantially increase required down payments as lenders jack up their rates to price for this new, unpredictable risk.
“In effect, it’s a tax on all the responsible homeowners. This is the last thing homeowners and our economy need."
FY2010 Spending Comments
In March of 2009, Congresswoman Bachmann released a statement noting her opposition to the spending levels for fiscal year 2010. In that statement, she denotes her opposition to numerous housing programs.
Bachmann Supports Responsible Alternative that Holds the Line for Taxpayers
"Democrats' FY10 Budget Inflates and Overspends"Washington, D.C., Mar 11, 2009 - U.S. Representative Michele Bachmann (MN-06) today provided the following at the Fiscal Year 2010 budget mark-up at the House Committee on Financial Services:
“Unfortunately, the ‘Budget Views and Estimates’ the Majority has prepared for mark-up today overspends and inflates the budgets of many existing government programs – even those that have now unspent money in their budgets.
“Between the so-called ‘stimulus’ bill and the omnibus appropriations bill, more than $51 billion was added to HUD’s budget for various programs.
“This includes the HOPE for Homeowners program, which has only served about 25 families, and the Neighborhood Stabilization Program, which provides a disincentive for lenders to actually rework borrowers’ mortgages so they may stay in their homes.
“In addition, ACORN remains eligible to receive taxpayer dollars by the billions under the President’s budget. Since 1994, they have received at least $53 million in direct federal funding, including through HUD’s HOME and Community Development Block Grant programs. This is incredibly frustrating to my constituents whose tax dollars are being doled out to an organization that has been associated time and again with proven voter fraud.
“Even the Majority seemed to understand that this was a problem last year when they ensured groups like ACORN could not receive taxpayer dollars under the Housing and Economic Recovery Act (HERA). The Administration’s budget should require the same level of oversight and accountability in its budget not just for housing programs but across the board for all government programs.
“I’d also like to comment on the President’s Homeowner Affordability and Stability Plan, which devotes $75 billion to a loan modification program and $200 billion to purchase Fannie and Freddie preferred shares. This plan still does not include safeguards to ensure bad actors and irresponsible borrowers are not rewarded over those who have been prudent, taken out loans they could afford, and lived within their means. And to double the government’s ‘investment’ in Fannie and Freddie at a time when the overwhelming evidence points to privatization is simply irresponsible.
“His plan also calls for bankruptcy ‘cramdown,’ a policy that will be detrimental to the already stressed housing market as lenders increase mortgage costs to price for this new risk. Even worse, the plan does not include a substantial safeguard to ensure cramdown is truly a last resort.
“The Republican budget alternative raises important questions that taxpayers deserve to have answered, urges holding the line on government spending and calls for Democrats to reject tax increases. And, rather than including $250 billion for another financial bailout as the Administration’s budget does, our alternative reserves judgment and calls for the Committee to develop an exit strategy from this current bailout mania. This is a better alternative, and I urge my colleagues to support it.”
Holding Those Who are Responsible Accountable
On March 19, 2009 Congresswoman Bachmann spoke on the House floor about the housing crisis. She asks if the government officials who were responsible for the housing crisis will ever be held responsible for their actions.
Mrs. BACHMANN. I thank the gentleman for yielding. And I am wondering when it will be that Congress will finally have hearings on itself and on the culpability of Members of Congress for this housing meltdown.
We look at individuals who were involved in shielding Freddie and Fannie for years from any sort of tightening, any sort of regulatory burden, any sort of accountability, any sort of transparency--for years. We look at comments that were made even by the current head of the Financial Services Committee. I sit on the Financial Services Committee. And the chairman of our committee, BARNEY FRANK, had made statements when he was confronted by former Treasury Secretary John Snow that Freddie and Fannie were in deep trouble. And he also foretold of a housing collapse that he was portending on into the future for the United States. And the comments from Representative Frank were, don't worry, everything's fine; there's no problem with Freddie and Fannie. People knew we were looking at a meltdown.
When are we going to have those hearings? When are we going to hear from Members of Congress, their culpability in bringing about this housing meltdown, about the Members of Congress who loosened and relaxed the platinum level standards of lending in our country? We had platinum levels of standards of lending for over 200 years in our country. Those lending standards were so reduced, that created our subprime mortgage mess. It even created a problem in prime mortgages because the lending standards were so reduced. That just didn't happen in the free market, because private businesses, they want to limit their risks. It was the Federal Government that forced these private businesses to maximize risk. With what? The promises that good old Uncle Sam, the chump called Joe taxpayer would bail these businesses out--AIG, Freddie, Fannie--if anything went wrong. We need to have a hearing where Members of Congress are called on the carpet for their involvement in leading to this housing collapse.
I yield back.
Opposition to Community Reinvestment Act
In September of 2009, Congresswoman Bachmann released a press statement noting her opposition to the expansion of the Community Reinvestment Act.
Bachmann Cautions Against Expanding Community Reinvestment Act
"Expanding without investigating is irresponsible"Washington, D.C., Sep 16, 2009 -
U.S. Representative Michele Bachmann (MN-06), member of the House Financial Services Committee, today released the following statement as the Committee considered expanding the Community Reinvestment Act (CRA), even after many experts agree that the CRA contributed to the financial collapse last fall:
“At the very least, it seems undeniable that we are putting the cart before the horse. Before we suggest that more entities be subjected to the CRA, which clearly encourages low underwriting standards and risky lending behavior, shouldn’t we consider whether it’s possible to reform the law, to fix its flaws or, as some have suggested, whether Congress should repeal it all together? Shouldn’t we at least fully examine the CRA’s role in the financial crisis?
“Our Committee should be focused on preventing another failure of our financial system and any discussion about the CRA should be to fully determine the role it played in the financial crisis.
“Furthermore, we need to focus on transparency under CRA. Right now, there is simply not enough sunshine in the system. For instance, recent events have ACORN again making unflattering headlines, including 11 more arrests in Florida for voter registration fraud and a series of videos showing ACORN workers engaged in giving individuals advice in evading several laws. Many have raised questions about whether banks have donated large amounts of money to the organization in order to satisfy their CRA requirements. The fact that there is not enough transparency under CRA right now to even answer those questions should raise red flags for us here.
“In light of all of this, to discuss expansion of the Community Reinvestment Act now is irresponsible.”
Full Cost of Fannie Mae and Freddie Mac
In February of 2010, Congresswoman Bachmann released a press statement noting her support for using the full cost of Fannie Mae and Freddie Mac.
The Full Cost of Fannie Mae and Freddie Mac Must be Accounted For
Fannie and Freddie Presser
Washington, D.C., Feb 23, 2010 - Today, U.S. Representative Michele Bachmann (MN-06) took part in a press conference as a cosponsor of the Accurate Accounting of Fannie and Freddie Mac Act. The bill is aimed at instituting a proper and complete accounting for the Government-Sponsored Enterprises Fannie Mae and Freddie Mac.
The Congressional Budget Office estimates that Fannie and Freddie added $291 billion to the federal deficit in 2009 and will cost an additional $389 billion to run over the next ten years. However, Fannie and Freddie are currently considered “off budget,” meaning the actual cost to run these agencies is not considered by the Office of Management and Budget. By moving the activities of Fannie and Freddie Mac “on budget”, their financial obligations would then be included in the federal government’s budget and debt projections and provide a more accurate picture of our nation's precarious finances.
A portion of her comments are below:
“The Accurate Accounting of Fannie Mae and Freddie Mac Act is a much needed remedy for a Washington that needs to come to terms with their spending addiction. One thing we know about Fannie and Freddie is that they cost the already overburdened and financially strapped taxpayer a pretty penny.
“Why should Fannie and Freddie be able to run up these numbers without the President having to reflect this risk in his budget? It just doesn’t make sense, and we owe it to the taxpayers to be transparent and forthcoming on the commitments we’re making with their credit card.”
Dartmouth Debate
On October 11, 2011 Congresswoman Bachmann participated in the Dartmouth debate. She spoke about the housing crisis and the interaction of the government to encourage buying houses.
KAREN TUMULTY: Congresswoman Bachmann, three years after the financial meltdown, Main Street continues to suffer. People have lost their jobs, they’ve lost their homes, they’ve lost their faith in the future. But Wall Street is thriving. The banks not only got bailed out by the government, they have made huge profits, they’ve paid themselves huge bonuses.
Do you think it’s right that no Wall Street executives have gone to jail for the damage they did to the economy?MICHELE BACHMANN: I think if you look at the problem with the economic meltdown, you can trace it right back to the federal government, because it was the federal government that demanded that banks and mortgage companies lower platinum level lending standards to new lows.
TUMULTY: But the federal government has also deregulated them.
BACHMANN: It was the federal government that pushed the subprime loans. It was the federal government that pushed the Community Reinvestment Act. It was Congressman Barney Frank and also Senator Chris Dodd that continued to push government-directed housing goals.
They pushed the banks to meet these rules. And if banks failed to meet those rules, then the federal government said we won’t let you merge, we won’t let you grow.
There’s a real problem, and it began with the federal government, and it began with Freddie and Fannie. If you look at these secondary mortgage companies which the federal government is essentially backing 100 percent, they put American mortgages in a very difficult place.
We had artificially low interest rates, Freddie and Fannie were the center of the universe on the mortgage meltdown, and we had lending standards lowered for the first time in American history. The fault goes back to the federal government, and that’s what’s wrong with Dodd- Frank.
Dodd-Frank institutionalized all of these problems that were put into effect by the federal government. That’s why I introduced the bill to repeal Dodd-Frank. It’s the Jobs and Housing Destruction Act.
Michigan Economic Debate
On November 10, 2011 Congresswoman Bachmann participated in the Michigan economic debate. She discussed recent actions at Fannie Mae and Freddie Mac.
HARWOOD: Congresswoman Bachmann, in one of the last debates, you were asked what you would do about foreclosures, and you told moms to hang on. But your advice, as your colleagues have mentioned, was let the economy recover. So you agree with Governor Romney that the way to fix the housing market is to let the foreclosure process proceed more rapidly?
BACHMANN: Well, what I agree with is that we have got to stop what we're doing now. When we had the financial meltdown, 50 percent of the homes are being financed by Fannie and Freddie. Today it's 90 percent of the homes. In other words, the government is the backer of the homes.
Well, let's take a look, an analysis of what a great, brilliant job Freddie and Fannie are doing. They just applied this week for another $7 billion bailout because they're failing. The other one applied for a $6 billion bailout because they're failing.
But what did they do? They just gave bonuses of almost $13 million to 10 top executives. This is the epicenter of capital -- crony capitalism. That's what's wrong with Washington, D.C.
For these geniuses to give 10 of their top executives bonuses at $12 million and then have the guts to come to the American people and say, "Give us another $13 billion to bail us out just for the quarter," that's lunacy. We need to put them back into bankruptcy and get them out of business. They're destroying the housing market.
Sponsored and Cosponsored Legislation
This representative has not been identified as sponsoring or cosponsoring significant legislation related to this title.