Washington Democrats have another new race-centric subsidy plan.
Washington Republicans, once again ‘dead in the water’ – have no better alternative to present to American families…
Fannie Mae’s New Racial Bias – WSJ
The government-sponsored housing giant embraces race-based subsidies.
June 13, 2022 – Excerpts:
It was probably inevitable that the Biden Administration would enlist housing giants Fannie Mae and Freddie Mac to advance its woke agenda, and now it has. Last week the government-sponsored enterprises released plans to promote housing “equity” that are chock-full of race-based subsidies.
Fannie and Freddie have been under federal conservatorship since Treasury rescued them during the housing meltdown with a $190 billion taxpayer bailout. The Federal Housing Finance Agency (FHFA) has since regulated their capital, liquidity and underwriting, as well as the mortgages they can acquire. Trump FHFA director Mark Calabria kept the monsters on a tight leash, but there was always a risk that a future Administration would ease up and politicize home lending again. That day has come.
In September the Biden FHFA announced it would require Fannie and Freddie to “prepare and implement three-year Equitable Housing Finance Plans that describe each Enterprise’s planned efforts to advance equity in housing finance.” Translation: They must find ways to boost minority homeownership no matter the risk for taxpayers.
Calling all of this mission creep is an understatement. The GSE equity plans would let the Administration spend billions of taxpayer dollars on housing without Congress appropriating a cent.
Freddie Mac’s equity plan also includes credit programs to address “systemic barriers” to housing for minorities but at least tries to camouflage its racial preferences. Fannie makes its subsidies for blacks explicit, but they don’t appear to extend to other racial groups such as Hispanics and Asians. Low-income white borrowers are also excluded.
These racially targeted subsidies are probably unconstitutional. Multiple federal courts have blocked a $3.8 billion Covid relief program to forgive loans for minority farmers. The Biden Administration may argue that a different legal standard applies to private companies like Fannie and Freddie, and that the credit programs are aimed at remedying past redlining.
But the GSEs are de facto state actors, and the Supreme Court held in Richmond v. Croson (1989) that governments may adopt racial set-asides only to remedy specific episodes of past discrimination that the government had a hand in. The GSE plans are supposedly intended to compensate for government-sanctioned redlining in the 1930s that Congress banned in 1968.
…… No economic good, and much social harm, will come from turning Fannie and Freddie into agents of progressive racial division.
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Washington Republicans again have nothing to put on the table – to transcend the politics and to ‘lift all ships.’
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