One article of faith amongst congressional Republicans, no matter how many times it gets thoroughly and completely debunked, is that government-backed mortgage giants Fannie Mae and Freddie Mac were responsible for the housing crisis of the last few years. This misguided prescription for how the housing bubble grew and burst led several Republicans to propose kicking the legs out from underneath the housing market by abolishing Fannie and Freddie with no viable alternative for the huge portion of the mortgage market that the two currently support.
However, at least one Republican lawmaker is not toeing the party line. In a speech, Rep. Gary Miller (R-CA) blasted his party for pushing policies that would make the housing market worse and for spreading lies about the role Fannie and Freddie played in the crisis:
Even though Fannie Mae and Freddie Mac have needed $138 billion in taxpayer aid since they were placed into government hands in September 2008, Miller defended their role, saying that they weren’t the primary drivers of the housing bust. […] [He] said Republican proposals to eliminate Fannie and Freddie and provide no replacement would dial back access to home loans dramatically and send the housing market into an even more severe downturn. Miller said eliminating Fannie and Freddie with no viable alternative “would cause a massive liquidity crunch…and hamper the recovery of the housing sector and the overall economy.”
As CAP’s David Min has noted, Republican plans to abolish government support for the mortgage market would essentially return the mortgage finance system to the 1930s; that was a system that “failed the vast majority of Americans, as mortgages were extremely limited and hugely expensive, and only available to the wealthiest homebuyers.” Fannie and Freddie assuredly have to go, but some form of government support for the market needs to remain, as Miller seems to realize. The rest of the GOP, however, would prefer to demonize Fannie and Freddie to score political points, without putting out a realistic vision for what they want the mortgage market to look like.