CAGW Names Rep. Elijah Cummings Porker of the Month
Saturday, June 02, 2012
(Washington, D.C.) – Today, Citizens Against Government Waste (CAGW) named Representative Elijah E. Cummings (D-Md.) its May 2012 Porker of the Month for his continued pressure on acting Federal Housing Finance Agency (FHFA) Director Edward DeMarco to pursue principal write down on mortgages owned by the two housing government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Director DeMarco has steadfastly refused to move toward principal forgiveness, citing his obligation to protect taxpayers and minimize additional losses for Fannie and Freddie, which are currently under the longest federal conservatorship in American history at a present cost to taxpayers of $183 billion.
Principal reduction by FHFA would involve eliminating a portion of a mortgage holder’s outstanding debt; a $400,000 mortgage on a home valued at $300,000 might be written down to a lower valuation, and the difference would be absorbed by taxpayers. Much of the political pressure to embark on this radical approach is driven by the fact that many of the Obama administration’s attempts to stem the mortgage meltdown have either had minimal success or
English: Congressional portrait of Elijah Cummings. (Photo credit: Wikipedia)
been abject failures. Rep. Cummings and other proponents of principal write down are eyeing the $50.2 billion in remaining TARP funds to fund this scheme. They would rather throw that money down the drain than return it to the U.S. Treasury to help take the edge off of the deficit.
Director DeMarco, whose mandate is to protect taxpayers and minimize the GSEs’ losses, favors principal forbearance, which would reduce monthly payments without altering the total amount owed. Director DeMarco is correct that principal forgiveness could cause compliant mortgage holders, once they realize that their neighbors are getting principal write downs, to stop paying their mortgages in order to qualify for loan forgiveness and a write down. Studies indicate that even though one-third of mortgage holders are currently underwater, nine out of ten continue to make their payments on time. A significant percentage of them would certainly choose to stop making payments and obtain a principal write down on the taxpayers’ backs.
For his refusal to saddle the taxpayers with additional costs, Rep. Cummings has called Director DeMarco “the biggest hurdle standing between our nation and the recovery of our housing market.” Along with other House Democrats, he has also called for DeMarco’s resignation, and stated that “He and he alone [DeMarco] stands in the way of hundreds of thousands of people, if not millions, being able to literally get a new lease on life.”
“There is one thing that taxpayers can always count on in Washington: the learning curve is very, very steep and Congress hasn’t kicked its wasteful housing habit,” said CAGW President Tom Schatz. “Political meddling got the country into this mortgage mess. Yet Rep. Cummings and his allies at the U.S. Treasury and the Obama administration are pushing hard for more interference in the housing market and billions more in wasteful spending.”
For trying to force the FHFA to institute radical new principal forgiveness policies which would prolong rather than mitigate the housing crisis, CAGW names Rep. Elijah Cummings it May 2012 Porker of the Month.
CAGW is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers.