Rep. Frank Lucas Opposes Spending Billions on Housing Bailout Bill

Statement

Rep. Frank Lucas Opposes Spending Billions on Housing Bailout Bill

Today, Congressman Frank Lucas stood up for personal accountability by refusing to support H.R. 3221, the "Foreclosure Prevention Act of 2008," a bill that spends billions of taxpayer dollars bailing out lenders and borrowers who made risky decisions in the housing market. The current bill contains several troubling provisions, including one that extends an unlimited line of credit from the U.S. Treasury to the Government Sponsored Enterprises (GSEs) Freddie Mac and Fannie Mae in an effort to reinstall confidence in them, and another provision that creates a permanent Affordable Housing Trust Fund which takes funding away from them.

"At a time when Fannie Mae and Freddie Mac are having financial difficulties, why are we diverting their funds to finance this Affordable Housing Trust Fund?" stated Lucas. "If we truly believe that these companies are in need of a bailout from the federal government, we should not be siphoning money from them to fund yet another unnecessary housing program."

This massive bill was initially an attempt to help the troubled housing market, however, it took on a life of its own, with the Congressional Budget Office now estimating its price tag at $25 billion. One of the more costly provisions includes an additional $300 billion to the Federal Housing Administration (FHA) to guarantee loans for at-risk borrowers who are close to foreclosure, basically dumping borrowers with a history of nonpayment on the federal government and releasing risky lenders from any liability or responsibility.

"While I support some provisions of this bill, such as long overdue GSE regulatory reform and FHA modernization, I do not agree with the overall message that it sends," stated Lucas. "By continuing to bailout lenders and investors who engaged in risky behavior, we are essentially saying there are no consequences for their actions."

President Bush initially threatened to veto the bill, but has since removed the threat, citing the impact Fannie Mae and Freddie Mac have on the financial stability the U.S. economy. While all sides agree that these companies, who own or guarantee more than 40% of this country's home mortgages, cannot be allowed to fail, Lucas believes that creating a bailout plan that exposes taxpayers to billions of dollars in debt is bad policy and sets a bad precedent.

"At a time when our national debt is over $9 trillion, this Congress should be passing legislation that provides meaningful reform in a fiscally responsible manner," stated Lucas. "We have an obligation to the American people to spend their money wisely and this bill does not."}

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