Obamacare for the mortgage industry?

by Ryan Smith02 Apr 2014
A conservative “astroturf” group has launched a media blitz attacking senators for their support of a proposed overhaul of Fannie Mae and Freddie Mac.

The 60 Plus Association, which bills itself as a “seniors advocacy group,” has released ads targeting seven senators for their support of a bill that would replace Fannie and Freddie with a new federal mortgage backstop. The bill, sponsored by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho), has the support of the White House.

The organization’s ads target three Democrats and four Republicans who’ve expressed support for the bill: including Joe Manchin (D-W.V.), Mark Warner (D-Va.), Kay Hagan (D-N.C.), Dean Heller (R-Nev.), Mark Kirk (R-Ill.), Jerry Moran (R-Kansas) and Crapo.

The 60 Plus Association says the bill is “disturbingly similar to Obamacare” – not a surprising comparison, since 60 Plus is less a “seniors’ advocacy group” than it is a front group for the pharmaceutical industry, according to a 2003 report from the AARP Bulletin. 60 Plus describes itself as a “non-partisan” advocacy group with “a free enterprise, less government, less taxes approach to seniors’ issues.” In 2005, the group’s “less taxes approach” included urging President Bush to limit federal relief efforts in the wake of Hurricane Katrina so as not to “dissipate the federal treasury,” according to the Center for Media and Democracy.

60 Plus claims the proposed overhaul of Fannie and Freddie “dismisses all current shareholder investments in Fannie and Freddie and wipes out ordinary investors.”

“These investors include retirees, teachers, police officers, and firefighters who will lose retirement savings while the government sucks all the profits,” 60 Plus Chairman Jim Martin said.

Hagan’s campaign, however, called the ad “nothing more than a scare tactic to seniors from a group that has no credibility on retirement security,” noting that 60 Plus had previously lobbied for the privatization of Social Security.

In reality, the “ordinary investors” 60 Plus refers to are mostly hedge funds and distressed-equity investors, according to the Wall Street Journal. The funds began gobbling up shares of Fannie and Freddie in 2008 as other investors dumped stock in the wake of the financial meltdown. As a condition of the government conservatorship that saved the teetering mortgage giants from collapse, Fannie and Freddie are required to send all their profits to the Treasury as dividend payments. If the companies were allowed to recapitalize, the hedge funds that snapped up their stock in 2008 could stand to make a killing.

And the group’s claim that passage of the bill would amount to a government takeover of the mortgage system is “hardly honest,” Jeb Mason, a former Treasury policy adviser for the Bush administration, told the Wall Street Journal.

“The point of reform would be to try to bring private capital back into the mortgage industry, not the opposite,” Mason said.


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