Republicans love to say that nothing’s more important cutting the Federal deficit. So why is Sen. Richard Shelby wasting $28 billion of taxpayer money? Shelby’s used parliamentary tricks to put more than half of the nation’s mortgages under the rule of an unelected official who answers to no one – except apparently Richard Shelby – whose wasting money like it’s going out of style.
Is Richard Shelby a closet Deficit Lover? In Washington that’s called The Love That Dare Not Speaks Its Name.
But the real answer’s much simpler. Richard Shelby is losing tens of billions of dollars, hurting millions of middle-class homeowners, and stalling our economy recovery for one reason: to take the White House away from the Democrats.
Shelby’s following the path laid out by Senate Majority Leader Mitch McConnell, who said the number one priority of GOP Senators is to make Barack Obama a “one-term President” – not to serve the nation.
If you want to create jobs or treat the sick, Sen. Shelby and his fellow Republicans will insist that we can’t afford it. But there aren’t enough zeroes on this page to count the money they’ll waste for partisan gain.
Edward DeMarco: The Man Shelby Made King
George W. Bush brought a far-right ideologue named Edward DeMarco into the Federal Housing Finance Agency, which controls Fannie Mae and Freddie Mac and therefore has power over more than half the mortgages in the country. Now DeMarco’s Acting Director of the FHFA, and where those mortgages are concerned he’s king.
Three years after becoming President, Barack Obama can’t get his own appointee into the job – because of Richard Shelby. That means DeMarco gets to stay on indefinitely.
Edward DeMarco misled Congress and the public by claiming that lowering principal on underwater mortgages would cost $100 billion. DeMarco’s own staff produced a report showing that a principal reduction program would actually save taxpayers $28 billion. But DeMarco didn’t tell Congress about that report.
An FHFA employee testified before Congress that there was a good pilot program designed to do exactly that. DeMarco didn’t tell Congress about that either. The employee testified that the DeMarco team killed the program, as a letter by two Democratic representatives explains, for “ideological reasons.”
The Shelby/DeMarco War On Homeowners
Interest rates for new loans climbed slightly to an average of 4.33 percent for mortgages of $417,000 or less, according to the FHFA’s own figures. But the FHFA isn’t even making it easier for homeowners to refinance, even though some underwater homeowners are paying 6 or even 7 percent on their loans. In fact, the unelected Ed DeMarco/Richard Shelby mortgage junta is making it harder to refinance by charging more to do it.
Even the economic traditionalists – Ben Bernanke, Larry Summers, Tim Geithner – are outraged. As a recent white paper from the Federal Reserve noted, Fannie and Freddie aren’t helping homeowners get loans – even when they clearly fall within the underwriting guidelines.
It would be sound financial management to help these homeowners refinance. But it would get in the way of the Shelby/DeMarco ideology.
The Richard Shelby/Ed DeMarco FHFA is betting that these homeowners will never refinance – and it’s paying some guy $2 million per year of taxpayer money, plus a huge bonus, to create complicated derivative-like deals to place its bets.
And just to show how far the Shelby/DeMarco crowd will go to push their radical-right agenda, they’re even opposing a very reasonable lending program that allows homeowners to cut energy costs and improve the value of their home. President Bill Clinton explains here.
Remember: They do what they do for “ideological reasons.”
The Real Cost of Shelby/DeMarco
The Shelby/DeMarco FHFA isn’t just costing us $28 billion. It’s also dragging down the entire real estate market, costing the entire economy tens of billions more.
And it’s not as if they’re good fiscal managers otherwise. After the massive bailouts that taxpayers were forced to pay for Fannie and Freddie, the Shelby/DeMarco FHFA is still bleeding red ink. DeMarco’s Fannie Mae just came to Congress, hat in hand, asking the government to cover $4.6 billion in additional losses that it has incurred under the supervision of the Shelby/DeMarco FHFA.
How do these people keep their jobs? By having Richard Shelby around to abuse the Senate’s rules.
The Senate’s #1 Rule Abuser
Senators can put a “hold” on nominations, and Sen. Shelby has used this parliamentary trick in extraordinary ways. He put every single Presidential nomination in the nation – all of them – on hold in 2010, just so that he could get some pork for his home state of Alabama.
That’s right: Richard Shelby was prepared to paralyze the government to get his earmarks passed.
As might be expected, President Obama made a very moderate choice when he appointed Joseph Smith to replace DeMarco. Smith was the former banking commissioner for South Carolina. He had an excellent reputation as a regulator, but he also had years of experience representing bankers as an attorney. So he was hardly a leftist firebrand.
That didn’t stop Shelby from claiming, with characteristic discourtesy and disrespect, that Mr. Smith would be a “lapdog” for the Administration. Shelby then resorted to the characteristic procedural chicanery for which he has become so infamous, and killed Mr. Smith’s nomination by placing another “hold” on it.
And that’s how America’s mortgages fell under the iron fist of the unelected Shelby/DeMarco regime.
Rocket In Your Pocket
He’s never really cared about deficits. Shelby, the self-described conservative, even pulled out all the stops in an effort to get billions of dollars for his home state in order to build the world’s biggest rocket.
Freudians might suspect that there is overcompensation involved, but the real motive’s much simpler: he wants more taxpayer-funded pork for his corporate patrons in Huntsville. Shelby’s cover story was that the rocket would improve the nation’s “competitiveness and prestige” – as if mass foreclosures, endless recessions, and joblessness aren’t hurting competitiveness and prestige.
But then, ending foreclosures won’t make billions of dollars for Boeing Corporation. When big corporations want taxpayers dollars, it’s deficits be damned. They can count on Richard Shelby to put a rocket in their pocket.
The Man Who Sold the World
So how much is Richard Shelby really costing the nation? $75 billion? $100 billion? More? We can’t know – in part because Shelby soulmate Ed DeMarco isn’t exactly forthcoming with his data. But we do know that Sen. Richard Shelby’s partisan agenda may be the most expensive act of electoral manipulation in American history.
Meanwhile the foreclosures roll on. Each one is a story of family heartbreak. And each one drags the economy down even more. It’s not just that the Shelby/DeMarco gang is made up of terrible fiscal managers, although that’s certainly true. But the other thing to know about them is this:
They’re not very nice people.
Arise, Ye Prisoners of Conservatism
You know who should join Occupy DC and the other great groups that are defending homeowners and pushing for the removal of Edward DeMarco? Fiscal conservatives. These guys are blowing a hole in the deficit the size of Indiana – literally. The total Indiana state budget is $28 billion – and that’s for two years.
You know who else should show up? Anybody who says they’re “tough on crime.” The money Shelby and DeMarco are wasting would restore the cuts that the last Republican budget made to law enforcement – and would cover them for the next 28 years.
We could go on like this forever, but you get the idea. Edward DeMarco is costing the taxpayer $28 billion in direct losses, and is hurting the entire economy a whole lot more than that. He’s also causing untold – and unnecessary – human suffering.
And who’s keeping him in power? Sen. Richard Shelby, the $28 Billion Man. He’s determined to win the next election for his party, and he doesn’t care how much of your money it takes to do it.
Richard (RJ) Eskow is a consultant and writer. This post was produced as part of the Curbing Wall Street project. Richard blogs at Campaign for America’s Future’s: No Middle Class Health Tax and A Night Light. His website is Eskow and Associates.