JACKSONVILLE, Florida Republicans presidential candidates have taken a hands-off policy on the U.S. housing crisis. At a debate on Thursday in Florida, it devolved into finger pointing.
A question about the government's involvement in the mortgage market prompted a fierce exchange between front-runners Mitt Romney and Newt Gingrich about who had closer ties to the troubled housing-finance firms that many conservatives blame for the housing crisis.
The exchange generated lots of heat, but shed little light on what either candidate would actually do to stem foreclosures and prop up falling property values in a state that has been ravaged by the housing crisis since prices started to collapse in 2006.
Romney pointed out that Gingrich had earned $1.6 million in the past decade consulting for one of the companies, Freddie Mac.
"What he was doing was clearly promoting ... Freddie Mac to the tune of $1.6 million. That is one of the reasons we're in the trouble we're in," Romney said.
Gingrich pointed out that Romney has profited from investments in Freddie Mac and its sister firm, Fannie Mae.
"Maybe Governor Romney, in the spirit of openness, should tell us how much money he's made off of how many households that have been foreclosed by his investments," Gingrich said.
Conservatives say the two firms' involvement in subprime mortgages helped create the housing bubble by making credit too readily available. Many economists blame lax regulation and an overheated private mortgage market as the primary culprits.
Federal Reserve officials have suggested that Fannie and Freddie, which the government took over in 2008, should play a greater role to get the market moving again.
Housing is an especially important topic in Florida, which holds its Republican primary on January 31. Housing prices in Florida have plunged around 45 percent from early 2006 and about half of homes sold recently were in default.
Republican candidates have been careful to show their concern as they campaign across the state. Romney visited a neighborhood that contained block after block of empty homes in the southern part of the state on Tuesday, using the occasion to attack Gingrich and Democratic President Barack Obama.
Gingrich asked the debate audience to raise their hands if they knew someone who had lost their home to foreclosure.
But neither Romney nor Gingrich thinks the government should do much to ease the crisis and say the market should be left to recover on its own. Outside economists say that approach could prolong the pain for years, and political analysts warn that approach could alienate independent voters in hard-hit states like Florida and Nevada.
Amid the sniping, Gingrich managed to propose a solution: break up Fannie and Freddie into smaller units and wean them from government control over a five-year period.
Romney, meanwhile, said the housing market would pick up once the economy recovers. That might be difficult, as the housing market is acting as a drag on the economy as a whole, according to a recent Federal Reserve report.
Romney also warned that the two agencies' continued involvement in the market could be running up prices again.
"They're offering mortgages, again, to people who can't possibly repay them. We're creating another housing bubble, which will hurt the American people," he said.
That's not borne out by market data. The Commerce Department on Thursday reported that home sales fell and the median home price dropped unexpectedly in December.
(Additional reporting by Steve Holland and Terry Wade; Editing by Eric Beech)