(Washington, D.C.) – The Council for Citizens Against Government Waste (CCAGW) today strongly denounced the Bush Administrations’ cave-in on H.R. 3221, The American Housing and Foreclosure Prevention Act. 

“The Bush Administration’s reversal on its veto threat on H.R. 3221 virtually ensures that taxpayers will be saddled with the huge costs associated with this bill for decades to come.  There are so many bad aspects to this bill, it is almost impossible to know where to begin,” said CCAGW President Tom Schatz.  “It was a bad bill to begin with and with the recent addition of the GSE bailout language, it went from bad to catastrophic.” 

The bill, which was already expected to cost $300 billion, was changed again last week to include a rescue plan for the nation’s two government-sponsored enterprises (GSE), Fannie Mae and Freddie Mac, after they suffered an alarming stock slide on July 11.  Fannie Mae and Freddie Mac either own or guarantee about $5.2 trillion of the nation’s home mortgages, nearly 70 percent of the mortgages made in this country. 

In addition, House Democrats resurrected a controversial $3.9 billion grant program that had been removed from the bill earlier due to opposition from the Bush administration.  The grant program assists states and localities in purchasing foreclosed properties.

“The President had wisely chosen to veto the bill over the grant program, which will be just another $3.9 billion slush fund for pork-barreling politicians.  But his flip-flop today will actually cost taxpayers hundreds of billions of dollars and have adverse implications for the mortgage and financial markets far into the future,” continued Schatz. 

“The GSE rescue plan, which is expected to cost $25 billion, places the taxpayers squarely and explicitly behind the GSEs.  The overall bill, which will constitute the most aggressive federal intrusion into the nation’s mortgage markets in history, does enact a long-overdue regulatory regime for the GSEs, but fails to address critical long-term structural reform of the GSEs, nor does it lay claim to any future GSE profits on behalf of taxpayers. 

“One provision in the overall bill requires that homeowners who take advantage of the assistance being offered in the bill pay back 50 percent of the equity gains in their homes to the government.  The GSEs, which have lived high off the hog for decades as a result of their special benefits, should not be given a blank check when even average homeowners will be required to pay something back to the Treasury.  Make no mistake about it, the taxpayers are getting ripped off,” concluded Schatz.     

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.