HUD, FHA actions under congressional scrutiny

Speaking at the opening of Wednesday’s House Financial Services Committee hearing with Housing and Urban Development (HUD) Secretary Julian Castro, U.S. Rep. Jeb Hensarling (R-TX) criticized the “War on Poverty” and called for a sound, sustainable housing policy.

“Last year, I think we all know was the 50th anniversary of the ‘War on Poverty,’ and 50 years and $20 trillion later, unfortunately, 15 percent of our fellow Americans remain at the poverty level,” Hensarling, the committee’s chairman, said. “So it’s hard to judge the ‘War on Poverty’ as a success. Perhaps the bigger failure is not living up to President (Lyndon) Johnson’s goal ‘not only to relieve the symptoms of poverty, but to cure it and above all to prevent it.’ ”

“Arguably, one of the most important weapons in the ‘War on Poverty’ has been HUD, with its many programs and its many employees,” Hensarling said. “So I wish to announce to all members that this committee will take an extensive review and thorough examination of the successes and failures of HUD — and not just measure inputs, but measure the outputs as well, and most importantly, again to paraphrase President Johnson, to find out how these programs can be designed to lift people from lives of poverty, lives of government dependency and lift them to the dignity of work and self-sufficiency.”

Hensarling said that at issue is the Obama administration-led, taxpayer-funded battle between the Federal Housing Authority (FHA) and the Federal Housing Finance Agency (FHFA) to become the nation’s largest subprime lender. “Whether FHA or FHFA wins that contest, I know that the marginal homebuyer on the bubble and the poor, beleaguered taxpayer — they will certainly be the losers in this race,” Hensarling said.

“History has taught us that the root cause of the financial crisis was not deregulation, but dumb regulation and helping put people into homes they could not afford to keep,” Hensarling said. “Now the FHA, with exceedingly low down payments and a recently announced approximately 40 percent cut in its premiums, appears to be doing that. All at a time where the FHA continues to violate federal law by keeping a woefully insufficient capital reserve and right after receiving its first-ever taxpayer bailout. This cannot be allowed to stand.

“We need a sustainable housing policy — sustainable for homeowners, sustainable for taxpayers, and sustainable for our economy,” Hensarling said. “The best program of affordable housing is a growing and healthy economy built from Main Street up, not built from Washington down.”