$15 billion grants to cities to buy foreclosed properties

The federal government created the housing crisis by making lenders lend to bad credit risks, and then having government created institutions like FHA, Fannie Mae, and Freddie Mac guarantee these bad loans.

Now the federal government has a bill that would "grant" cities $15 billion of taxpayers' money to buy foreclosed properties. The House on Thursday also passed, 239-188, a bill to send $15 billion to states to buy and fix up foreclosed property. Bush has threatened to veto that measure also, contending it rewards the very lenders who helped caused the housing chaos and could act as an incentive for them to foreclose rather than find ways to help struggling borrowers stay in their homes. H.R. H830

Why would the cities want to buy bad, foreclosed loans from the banks? Why not let the banks deal with the problem?

The bill was proposed by Democrat Congressman Barney Frank. He is the Chairman of the Financial Services Committee. Sixteen mayors of the 25 largest cities in America are democrats. The large city mayors see a way of getting the rest of the country to send them 15 billion dollars to buy foreclosed properties that are not paying property taxes. If the cities buy the properties, they will have to pay the back taxes, to themselves, with other people's money. What a deal. The properties will still be vacant, and for sale, as if the banks still owned them. The only difference is the back property taxes will be a windfall for many big cities, who already spend too much.

The banking lobby did a good job of getting congress to force the taxpayers to buy the foreclosed properties from the banks. The banks and lenders will be happy to unload these properties, at the expense of the taxpayers no less.

The promoters of this bill dissemble when they say they are helping the economy and helping the little people. Falling home prices have made homes more affordable for more people than before. People are buying vacant condos and townhouses and renting them with a positive cash flow. New home construction is down, therefore reducing the supply of houses, while the population of the United States increases. There is no reason, not one, nor is it justified in the constitution, for the Congress to forcibly take money from the taxpayers and give to the cities to buy foreclosed properties from banks and lenders.