Mega FHA bailout reportedly in the works
Rep. Garrett: Bailout news not a surprise to lawmakers
Lawmakers who stand against the current structure of the Federal Housing Administration were among the first to pipe in when reports of a possible FHA bailout surfaced Wednesday afternoon.
A Reuters report, citing unnamed sources, said for the first time in the agency’s history, the FHA will need a Treasury bailout when the current fiscal year ends.
The report was credible enough for Rep. Scott Garrett, R-N.J., to pipe in with a comment.
Garrett is one of several lawmakers behind an ongoing push to restructure the FHA.
"For several years now, President Obama has kicked the can down the road while the Federal Housing Administration’s (FHA) fiscal position continues to worsen," Garrett wrote after hearing news reports of the impending bailout.
"Reports of the FHA needing a bailout should come as no surprise," he added. "Time and time again, government guarantees lead to taxpayer-funded bailouts. But the American people are sick of seeing their hard-earned dollars going to bailout irresponsible government programs run by Washington bureaucrats. To make matters worse, the FHA benefits from an unlimited and direct line of credit from Treasury.”
Of course, Garrett used the moment to plug the PATH ACT – legislation drafted in the House – which intends to restructure the FHA as well as Fannie Mae and Freddie Mac.
"This bailout would require no congressional action, and that’s a problem. The PATH Act, recently passed by the House Financial Services Committee, will reform our housing finance system and get the FHA back on track to prevent future bailouts," Garrett added.
HUD could not be immediately reached for comment, but reports of an impending bailout are nothing new.
Several months ago, the White House and FHA suggested the agency may be required to tap up to $943 million in taxpayer bailout funds.
At the time, FHA Commissioner Carol Galante admitted the funds may be required in the future.
Based on the Reuters report, it seems the FHA has reached that point.