Cronyism: The Obama regime has quietly ordered Fannie Mae and Freddie Mac to start donating hundreds of millions of dollars a year to a permanent affordable-housing slush fund for Democratic activist groups.
Earlier this month, while few were paying attention, Federal Housing Finance Agency chief Mel Watt sent letters to the mortgage giants to “set aside in each fiscal year 4.2 basis points of each dollar of unpaid principal balance of new business purchases to be allocated to the Housing Trust Fund and the Capital Magnet Fund.”
That’s a 0.042% tax to equip the funds. HUD will run the housing fund; the Treasury Department will run the capital fund.
If the funds had been operating in 2010, when Fannie and Freddie together bought $856 billion in new mortgages, Fannie and Freddie would have pumped a whopping $360 million into the funds. Estimates put their total for fiscal 2015 at half a billion dollars.
The money will help build apartments for extremely low-income Americans, says Watt, the former Congressional Black Caucus leader whom President Obama hand-picked to regulate Fannie and Freddie. The funds will also help the poor afford their own homes through down payments and other assistance.
But nonprofit housing activist groups will distribute the funds. So count on money being diverted to ACORN fronts and clones, beholden to the Democratic Party, who in the past have laundered housing grant money to finance political campaigns.
As we’ve reported previously, ACORN affiliates are still operational in New York and other cities, having renamed themselves after ACORN was busted for fraud and corruption during the 2008 presidential campaign. They’re also still receiving HUD housing grants.
In the past, these groups have used HUD grants to pressure banks to make ill-advised home loans that sped the mortgage crisis. Now a permanently funded war chest will aid their shakedown — courtesy of taxpayers still on the hook for Fannie and Freddie.
The last thing the nation needs is another Washington scheme that further politicizes the lending and home-building markets. Yet rest assured that will be the end result of these national housing funds.
Making matters worse, they’re unaccountable to congressional appropriators, making them ripe for corruption and cronyism. We’re talking about billions of dollars funneling through left-wing nonprofits and floating around in urban reinvestment projects sponsored by the likes of Rahm Emanuel and Al Sharpton and Jesse Jackson.
With this potential $500 million slush fund, moreover, the Obama regime is effectively turning Fannie and Freddie into off-budget welfare agencies — indeed, a self-sustaining shadow government for the left wing that will survive even Republican administrations.
Now we know what the president really had in mind when he promised to “reform” the bankrupt mortgage giants.