The feds nationalized housing, and now the nation is on welfare 

When TARP Inspector General Neil Barofsky testified before Congress late last month, he received ample coverage for highlighting the incompetence of Treasury Secretary Tim Geithner in his work bailing out AIG.

Barofsky’s outspokenness on the failures of the Troubled Asset Relief Program he oversees, and the increased risk it has created, has won him praise from politicians in both parties.

“He probably feels it’s his responsibility to sound the alarm as long and as loud as he can,” Rep. Scott Garrett, R-N.J., said.

Lost in the AIG headlines was another urgent warning contained in the report. An entire section details the federal government’s extensive efforts to reinflate the sagging housing bubble. Although Barofsky draws no staggering conclusions, the facts he presents are staggering all on their own — especially if you’re a homeowner.

If you watched with alarm as the government took over General Motors and Chrysler, and as Democrats tried to increase government’s role in the health care industry, you should be scared to death by Barofsky’s discussion of the mortgage markets.

The unspoken bottom line: The federal government has already nationalized the housing industry. We’re not just talking about Uncle Sam providing a few subsidies, or even taking over a few of the big players, as they have in the auto industry. This is a complete takeover. Every new mortgage today is a government mortgage.

During the past two years, government mortgage and mortgage-backed holdings have grown on net by nearly $1 trillion. Private investors and institutions have shed more than $1.5 trillion through foreclosure losses, paydowns and by selling to the government.

The effective result is a government-run housing market. Barofsky reported that right now, the government is responsible for about 100 percent of all new mortgage activity.

Not even the savings and loan scandal of the early 1990s put all current and potential homeowners at Uncle Sam’s mercy as today’s situation has.

If not for government underwriters and bundlers of mortgage-backed securities, there might not have been a single house sold in this country last year.

We’re all on welfare now — not just helped out by a few homeowner tax breaks, as in the past, but completely, utterly dependent on a trillion-dollar government commitment lasting forever. And we’re all in peril if for any reason we lose a handout that most of us never asked for.

David Freddoso is The Examiner’s online opinion editor.

About The Author

David Freddoso

David Freddoso came to the Washington Examiner in June 2009, after serving for nearly two years as a Capitol Hill-based staff reporter for National Review Online. Before writing his New York Times bestselling book, The Case Against Barack Obama, he spent three years assisting Robert Novak, the legendary Washington... more
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