Obama’s Latest Plan to take over the Private Sector

Quick, name me one thing the government does better than the private sector?

Frankly, I’ve really tried and I can’t come up with one.

At the moment, I am reeling over the latest scheme to expand government under the guise of shoring up the nation’s real estate market.  President Obama is laying the groundwork to become the nation’s landlord-in-chief.   He wants the government to rent out these houses.

The Federal Housing Finance Agency announced it is seeking input from investors on how to rent homes owned by government-controlled Fannie Mae and Freddie Mac and the Federal Housing Administration.

Republicans, too, are caught up in this scheme.    Rep. Gary Miller (R-CA) introduced “The Neighborhood Preservation Act,” H.R. 2636, which would authorize Fannie and Freddy to enter into lease agreements.

Please!   Hasn’t the government done enough?  Will it ever stop this madness?

In 1970, Jimmy Carter signed “The Community Reinvestment Act” which “encouraged” and even required banks to make investments in lower quality assets.  Over the years banks and other financial institutions went way beyond the requirements in their efforts to appease Uncle San.

Lower quality gave way to no quality and why not? The government began requiring Fannie  and Freddie, the government-sponsored enterprises that purchase and securitize mortgages, to devote a percentage of their lending to support “affordable housing,” which is the euphemism for giving loans to people who otherwise would not qualify.

This created a boom in the housing market that simply could not be sustained and unfortunately caused many otherwise responsible people to buy houses they could barely afford during good times.

It was party time, not only for the banks, but hedge fund managers who jumped into the business of buying up some of these bad loans and offering unbelievable returns.

After the housing collapse and the ensuing financial crisis, the government, i.e., taxpayers, began funding Fannie and Freddie.  We the people currently own roughly 248,000 foreclosed homes.   Currently only about 70,000 of those homes are even listed for sale because of further government meddling.

Can you imagine the size of the government bureaucracy that will be needed to handle Obama’s plan to rent out these homes?   Ronald Reagan said that the closest thing to eternal life we have on Earth is a federal government program.   Once that bureaucracy is established, we will never get rid of it.

Can you imagine the size of the salaries of those who manage the government’s rental houses?  Staggers the imagination!  It will have no relationship to the salaries paid to property mangers in the private sector.  Furthermore, you can bet those houses will be rented at rates far below the current market which will drag out the housing crises and undermine the rental market.

I admit.  I have a vested interest in the rental market.  I and countless other small investors purchased rental homes and tended them over the years in order to build equity and finance their retirements.

The only way to improve the housing market and the nation’s economy is to let the housing market reach the bottom, sooner rather than later.  The only way to let taxpayers off the hook is to cut our loses and get the government out of the housing market.

Put those houses on the market sooner rather than later.  Everything will sell at some price.  A good way to speed the process that won’t cost the taxpayers a dime is to take the capital gains tax rate to “0″ on houses that are purchases in the next two years and held for three to five years.  That will bring investors out of the woodwork.   The market will take over and there will be ample housing on the rental market at a fair price.

The beauty of this plan is that those houses would not be resold all at once.  Some will be held for years.
Mark Dotzour, the chief Economist at the Real Estate Center at Texas A&M University, has been making this point.  For far too long, he has been like a lone voice crying in the wilderness.  We need the Republican candidates for president to take this idea to the people.    We need our citizens to stop Obama from becoming the nation’s landlord!

Dotzour admits that a few banks will close (and they should).  However, he says the real reason the government will not sell the houses is “the FDIC is insolvent.”  By drawing the housing crisis out “the government is hiding the true extent of our losses.”   In other words, Obama is trying to make the balance sheet look better than it is.


Let the market work and the real recovery begin.


2 thoughts on “Obama’s Latest Plan to take over the Private Sector

  1. Are you saying the U.S. has outgrown it’s own government, or, the U.S. is simply too large to Govern. That it’s become too large, too diverse, etc. it may be time to ‘reorganize’? e.g. USA/East and USA/West?


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s