I guess I should have known better.
Maybe it was naïve of me, but I truly thought that a hearing titled, “The Future of Housing in America: Oversight of the Federal Housing Administration,” hosted by the United States House of Representatives Committee on Financial Services and featuring U.S. Department of Housing & Urban Development Secretary Julián Castro would actually, you know, accomplish something…anything.
But I was so incredibly wrong.
It became pretty clear to me how wrong I was shortly after Castro finished his opening testimony and the statements, questions, blustering, pandering and grandstanding began.
One by one, the members of the committee took their turns to question Castro. Many, especially on the Republican side of the aisle, took nearly all of their five allotted minutes to hammer Castro over the Obama administration’s decision to cut the FHA’s annual mortgage insurance premium from 1.35% to 0.85%.
Over and over and over and over again, the Republican members of the committee vigorously questioned the FHA’s capital reserve ratio, which rose by almost $6 billion in the last 12 months, printing recently at $4.8 billion. Conversely, last year it fell short by more than $1.3 billion.
The improvement of the FHA’s Mutual Mortgage Insurance Fund capital ratio was unsurprisingly heralded by Castro and Democrats on the committee, but the MMI capital ratio currently stands at .41%, well below the 2% mandated by the government.
And the FHA’s lack of capital was the noose that the Republicans were just waiting to hang around Castro’s neck.
Time after time, the Republicans on the committee, from Chairman Jeb Hensarling, R-Texas, on down, took turns laying the trap for Castro, trying to get him to admit that the FHA was in violation of the law because its capital reserve ratio was so low.
“The MMIF must maintain a capital reserve ratio of no less than 2%. It’s not may. It’s not might. It’s not hope. It says shall,” Hensarling said, quoting the FHA’s mandate.
Castro, to his credit, didn’t take the bait. Instead, he repeated a line he used when he appeared recently on The Daily Show with Jon Stewart, saying that the FHA is on track to reach its mandated capital reserve ratio within two years.
“With all due respect, we have heard that before and you are sincere,” Hensarling said. “But this committee has been told that once, twice, three times, and it hasn’t proven true. Once again, you are in violation of the law and that has got to stop.”
But that was just the tip of the Titanic-esque iceberg that was the rest of the four-hour hearing.
The Republicans continually questioned how the FHA’s decision to cut the insurance premiums now made fiscal sense considering the precarious position of the MMI fund.
Nearly all of Hensarling’s fellow Republicans laid various versions of the same trap for Castro, seemingly hoping that he would fall victim to a “gotcha” moment that would be splashed all over Fox News for a week.
Just imagine how this headline would look on the crawl underneath your favorite talking head, “Obama Administration Official Admits Government Agency Is Breaking the Law.” It would be a right-wing dream come true.
But Castro never took the bait. He stuck to his talking points, however empty they may be. I guess you have to respect him a little bit for not playing politics in this case. Because everyone else in that room certainly was.
It was nothing but hour after hour of empty blather. The Republicans took turns taking shots at Castro and the FHA from atop their soapboxes and pandering to their base.
But what didn’t they do at any point in the four hours that Castro was in the hot seat?
Offer up any possible alternative or solution of how to get the FHA to its mandated 2% capital reserve ratio sooner than Castro’s projection of two years.
Yep, they sat there for four hours; trying to get Castro to hang himself, instead of offering up even the slightest inkling of an idea of how to address the problem they so enjoyed using as a weapon to attack Castro with.
On the other hand, the Democrats on the committee used their allotted time to praise the FHA’s premium cut, offering Castro leading questions about how many potential borrowers this cut will bring into the market and how much money it will save current FHA borrowers.
For example, Rep. Maxine Waters, D-Calif., ranking member of the Financial Services Committee and basically the diametric opposite of Hensarling, praised the FHA’s decision.
“Secretary Castro, although today you will likely take a fair amount of criticism from my colleagues on the other side of the aisle for your decision, I’d like to take a moment to remind them that when the private sector virtually left our struggling housing market during the worst of the crisis, the FHA stepped up and provided the liquidity that kept it afloat,” Waters said in her prepared remarks.
“I would also note that FHA is far from bankrupt, holding approximately $40 billion in reserves, continuing to generate revenue, and taking critical steps to recover its capital reserves, which are projected to show a positive balance in 2015.”
The partisanship has gotten so bad that the Twitter accounts of the House Committee and the committee’s Democrats got into a little fight while the hearing was still going on, referencing an event also held on Tuesday where Hensarling spoke about the causes of the financial crisis.
I mean, this is what it’s come to in Washington? No answers and no solution. Just pandering and grandstanding. All partisanship and no progress. And silly Twitter fights.
In the end, nothing was accomplished. The future of housing in America is just as murky as it ever was.
The whole thing was just an empty exercise. Full of sound and fury, signifying nothing.
And I should have known better.
[Update: Background of Twitter exchange between the accounts of the House Committee and the committee’s Democrats added for clarification.]