House Financial Services Committee Chairman Spencer Bachus (R-AL) has already announced his belief that Washington’s role is to “serve the banks.” To that end, Bachus has decided that Congress’ fiscal super committee, in order to reach its goal of $1.5 trillion in deficit reduction, should cut foreclosure prevention programs and repeal the Dodd-Frank financial reform law:
Bachus also recommended the committee cut funding for a variety of foreclosure prevention programs. He proposed ending the Home Affordable Modification Program early, which is set to expire at the end of 2012. Under HAMP, more than 816,000 borrowers received a permanent modification, which will still fall short of the 3 million to 4 million originally estimated.
The proposals also included cuts to the struggling Federal Housing Administration Short Refi program, the remaining unspent money for the Neighborhood Stabilization Program, various public housing operations under the Department of Housing and Urban Development and appropriations for the housing counselor organization NeighborWorks.
Bachus ended the letter with another call to repeal several provisions under the Dodd-Frank Act, pointing to faulty government housing policies rather than out-of-control Wall Street leveraging as the cause of the real estate bubble and the resulting financial crisis.
As BusinessWeek noted, “the proposals [regarding Dodd-Frank] range from changing the structure and funding of the Consumer Financial Protection Bureau and expanding exemptions from new derivatives regulations to a full repeal of the law.” Twenty-one other Republicans signed Bachus’ letter.
But left out of their equation is the fact that Dodd-Frank reduces the deficit by $3.2 billion over 10 years, according to the Congressional Budget Office. So repealing the law, in addition to sending the regulatory system back to 2007, would actually make the deficit worse.
Of course, cutting foreclosure prevention funding would, indeed, reduce the deficit. But it would do so at the expense of a housing crisis that has continued to burn unabated. Though federal foreclosure prevention programs have been woefully implemented, the answer isn’t to give up and cut the funding. It’s to finance the sort of programs that have already been successful. Instead, the GOP is aiming to, once more, do the banks’ bidding when it comes to the federal budget.