Instead of moving to put FM/FM into a more easily understood model--either nationalizing them, or privatising--they're making the GSEs even weirder, and of course, piling on more debt...keeping pet companies on a leash so that you can use them as a sort of housing market slush fund, while pretending that the liabilities you thereby create don't really affect the government, is the kind of thing one expects to see in a banana republic, not a free and prosperous nation.
Local governments could use the grants to purchase, renovate, and resell foreclosed homes, and then use the proceeds from these sales to repeat the process.
I get it. If I use my own money to purchases, renovates, and resell a home, that's greedy speculation. But if you use my money to do it, that's community development. The Washington Post reports,
In addition to mortgage bankers, interest groups as varied as home builders, real estate agents and civil rights groups back the legislation.
The "civil rights groups" are local activists who expect to rake in the big bucks from "community development."
Basically, the housing bill rewards everyone who participated in the excesses of the housing market and punishes the rest of us.
Lately, I've been reading a lot about Switzerland. There, just about any legislation is subject to veto by a popular referendum. This is an instance in which I wish we had a referendum in this country. I doubt that this housing bill would win more than 20 percent of the vote.