WASHINGTON (Reuters) - The United States needs to be weaned from its reliance on government funding of mortgages by privatizing housing finance giants Fannie Mae FNMA.OB and Freddie Mac FMCC.OB, the top Republican on the House Financial Services Committee said on Thursday.
“What we now have is an addiction to government funding of mortgages,” Representative Spencer Bachus told the Reuters Washington Summit.
Bachus would be in line to head the financial services committee if his party gains the 39 seats necessary to wrest the majority from House Speaker Nancy Pelosi and her fellow Democrats.
Boosted by voter disappointment at President Barack Obama’s perceived handling of the economy, the Republicans look set to pick up dozens of seats in the House, with a real chance to win back control from Democrats who took control four years ago.
Fellow Alabamian Richard Shelby, a former Democrat turned Republican, told Reuters earlier in the week that he would work to privatize the two government-controlled housing finance firms if he becomes chairman of the Senate Banking Committee.
Bachus acknowledged that privatizing Fannie Mae and Freddie Mac could not happen suddenly.
“Like any addiction, you can’t just withdraw the punch bowl immediately,” Bachus said, “we know that we can’t just abolish these agencies overnight.”
House Republicans on Thursday formally unveiled their “Pledge to America” campaign agenda aimed at creating jobs, cutting taxes and shrinking government, including ending government control of Fannie and Freddie.
Congress and the Obama administration are considering how to restructure the two government-sponsored companies, which have together taken about $150 billion in direct government aid since they were seized two years ago amid mounting losses.
The administration has promised to lay out by January its vision for the two firms, which buy residential mortgages to free lenders to make new loans.
“Why should the government subsidize anybody’s mortgage? I don’t think they should,” Bachus told the Reuters summit, adding that more people should be renters.
But Bachus does not want to commit political suicide.
Asked if the hugely popular mortgage interest tax deduction should be repealed, Bachus firmly said “no ... homeownership is a good thing.”
“In communities where there is a high percentage of homeownership, you have children do better in school, crime goes down, there’s a greater pride in the neighborhood ... you can demonstrate a long litany of benefits from homeownership, but that doesn’t extend to our citizens who don’t have the capacity to make those mortgage payments,” Bachus said.
Reporting by Corbett B. Daly; Editing by Tim Dobbyn