NYT Wrong, LAT Right on Housing
Conn Carroll /
We don’t know what reality the New York Times editorial board lives in, but it is definitely not the same one Los Angels Times hard news reporters operate in. Today the NYT editorializes:
In an election year, sound policy making is almost always trumped by political posturing, making the situation even bleaker. A case in point is the new foreclosure-prevention law. President Bush threatened for months to veto it, before signing it in July. The law’s main feature — allowing the government to guarantee hundreds of billions of dollars in new mortgages to troubled borrowers — won’t take effect until Oct. 1.
The law’s other important feature — a contingency plan for a government bailout of Fannie Mae and Freddie Mac, the nation’s biggest mortgage companies — was a last-minute, crisis-driven addition, the opposite of the ahead-of-the-curve action that is now needed.
This is just factually wrong. The government bailout of Fannie and Freddie was the only reason the housing bill passed. As the LAT accurately reports: “Bush dropped his opposition after Congress agreed to include a potential $25-billion safety net for mortgage giants Fannie Mae and Freddie Mac, which are federally chartered but investor owned.” The “foreclosure-prevention law” (which does not prevent foreclosures) and $4 billion housing slush fund, were the add ons Bush had to swallow to bail out Fannie and Freddie. Speaking of that $4 billion slush fund, the LAT reports:
The Times contacted housing officials in the 12 California counties with the highest concentrations of foreclosed properties. Most of them said they had not lobbied for the bill, and several wondered whether they even had the staff to make use of the funding.
So who did lobby for the $4 billion? The LAT: “These nonprofit groups, including the New Orleans-based Assn. of Community Organizations for Reform Now [ACORN] and Enterprise Community Partners in Columbia, Md., were among the provision’s biggest supporters.” And who is ACORN? A partisan activist organization that has a long and established history of using fraud, deceit and intimidation to achieve its goals. The LAT continues:
What’s more, an analysis by The Times shows that the California communities with the most foreclosures — and therefore likely first in line for federal aid — already have a relatively ample supply of affordable housing.
[Realtors] are concerned that the government will be negotiating to buy homes in bulk from banks that own properties in multiple states, further weakening prices and providing competition to homeowners trying to sell in a down market.
The new law mandates that local governments demand a price cut, and that could mean that new appraisals on all the properties near a government-purchased home would be dropped by a similar amount.
But the NYT editors are oblivious to all unforeseen consequences of government intervention in the marketplace. They urge:
Congress also cannot wait to see if its anti-foreclosure measures work. It must begin to vet other ideas and be ready to move quickly if the crisis worsens.
In other words: “Don’t bother to see if current government intervention is helping or harming, just press ahead as fast as you can to intervene more. Actual results be damned.”