Romney renews welfare reform attack against Obama

Romney in Des Moines (Justin Sullivan/Getty Images)

DES MOINES, Iowa—For the second day in a row, Mitt Romney attacked President Barack Obama on welfare reform, accusing his Democratic opponent of ditching a work requirement for those receiving government assistance.

Speaking at a local high school, Romney charged that Obama was undermining welfare reforms signed into law by former President Bill Clinton. But he added a new argument, telling supporters here that Obama spoke out against the work requirement when he was a member of the Illinois Legislature.

Romney accused Obama of simply carrying out his "original intent" to dial back the Clinton-era reforms with a recent Department of Human Services directive that removed some federal work requirements in order to allow states to be more flexible in determining who could qualify for government assistance.

"It is wrong to make any change that would make America more of a nation of government dependency," Romney said. "We must restore work in welfare."

If elected, Romney vowed, he would roll back the DHS directive, telling supporters, "I want more people working if they're going to receive government assistance."

Romney's comment came just hours after Clinton issued a statement calling Romney's claims "not true." And it happened just a day after the Romney campaign released a television ad attacking Obama on welfare reform, a spot that used Clinton's image. On Tuesday, the White House and the Obama campaign trashed Romney's claims on welfare reform as "blatantly dishonest."

It was Romney's first visit to Iowa in more than a month. Taking the stage, he called Des Moines a "home away from home" and gave a shoutout to Centro, an Italian restaurant popular among media and political types in town covering the Iowa caucuses.

But Romney quickly became somber, arguing that Obama's policies have not helped Americans around the country who are struggling.

"It's tough to be in the middle class in America today," he said.

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Bill to reform Fannie, Freddie unlikely soon (Reuters)

WASHINGTON (Reuters) – The U.S. housing finance system badly needs an overhaul, but chances for winding down ailing mortgage giants Fannie Mae and Freddie Mac in the near term are remote, the top Republican on the U.S. House of Representatives Financial Services Committee said on Tuesday.

"We would like a comprehensive bill. Now, can we get a comprehensive bill? I don't know. I don't think so," said Representative Spencer Bachus, an Alabama Republican who chairs the House Financial Services Committee.

Bachus said at a capital markets subcommittee markup of seven small bills relating to Fannie Mae and Freddie Mac that he is waiting on the Obama administration to introduce a formal outline of how to deal with the two mortgage giants before moving forward in the House with broader legislation.

He was sharply criticized by Representative Barney Frank, the leading Democrat on the committee, for stalling on congressional action to reform Fannie and Freddie.

"I have been hoping that we are going to get legislation to replace Fannie Mae and Freddie Mac. Now I am told by the chairman that we can't do that -- that he isn't able to get a bill passed," said Frank, a Massachusetts Democrat.

FRANK: GOP LACKS REFORM VOTES

The Republicans, Frank said, do not have the necessary votes to enact wider reform of Fannie and Freddie. He questioned the GOP tactic of introducing a flurry of smaller bills over the past couple of months to incrementally reduce the government's role in the mortgage market.

Bachus said he met with Treasury Secretary Timothy Geithner and Housing Secretary Shaun Donovan in April, along with other members of his party, to discuss various proposals on housing finance reform.

He blamed the Obama administration for failing to take the lead on writing a formal reform plan for Fannie and Freddie, and said that has kept Republicans from voting on a comprehensive bill.

The Obama administration outlined ideas for restructuring the housing finance system in February, but did not call for specific legislation.

The Treasury Department unveiled three options in February for overhauling the U.S. housing finance system, and recommended selling off the loans Fannie and Freddie hold over time.

"I'm being criticized here for waiting on the administration. If they want to bring forth a comprehensive proposal, they have two or three weeks to do it," Bachus said.

Fannie Mae and Freddie Mac are companies chartered by Congress to make financing available to support housing markets. The government took over the companies, which are known as government-sponsored enterprises, in September 2008 at the height of the financial crisis when they were hit hard by soured home loans.

More than 85 percent of new loans are backed by the government in some way, including Fannie, Freddie and the Federal Housing Administration, which does not make loans directly but insures those that meet certain standards.

The House capital markets and government-sponsored enterprise subcommittee is considering seven small bills from Republicans. The bills mainly address capping the total dollar amount of federal bailouts for Fannie and Freddie, which have cost taxpayers more than $135 billion so far this year.

Any measure approved in the House subcommittee would have to be approved by the full committee, then the full House and the Senate before it could be sent to President Barack Obama to be signed into law.

Debate over the fate of the mortgage finance enterprises, which are central to the secondary housing market, is expected to spill into 2013.

(Reporting by Margaret Chadbourn; Editing by Jan Paschal)

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Risk retention crucial to housing reform: Treasury (Reuters)

WASHINGTON (Reuters) – Regulators want to ensure mortgage lenders retain some of the risk on loans they originate, as it is crucial to strengthen the housing finance system, a top Treasury official said on Friday.

"We are committed to implementing risk retention reforms in a thoughtful manner that ensures continued access to sustainable mortgage credit for low- and moderate-income borrowers and protects the health of the still-fragile housing market," Treasury Under Secretary Jeffrey Goldstein said in remarks prepared for delivery at mortgage conference.

"Better underwriting practices for mortgages are good for consumers, good for the financial industry, and good for the economy," Goldstein said.

The Treasury is involved in implementing requirements from the Dodd-Frank Wall Street reform bill to curb risk-taking at financial firms. The legislation called on federal regulators to establish new guidelines for lenders and originators of securitized loans, the types of instruments that fueled the 2007-2009 financial crisis.

The proposed rules are intended to reduce risk-taking by forcing lenders to hold onto a 5 percent stake in any loan bundled for investors in the secondary market. Regulators proposed an exemption for the so-called qualified residential mortgages when borrowers make 20 percent down payments.

Critics say the rules would keep potential first-time buyers out of the housing market and drive up borrowing costs because lenders would charge higher rates for loans that do not qualify for the exemption. A comment period on the proposed rule expires on August 1.

The new rules are being proposed jointly by six federal regulators: the Federal Reserve, the Department of Housing and Urban Development, the FDIC, the Federal Housing Finance Authority, the Securities and Exchange Commission, and the Office of the Comptroller of the Currency.

An unlikely alliance of mortgage and consumer groups -- including the American Bankers Association, the Center for Responsible Lending and the National Community Reinvestment Coalition -- have petitioned for regulators to make changes, and say the proposal could make it more difficult for borrowers to find affordable home loans.

Goldstein said regulators were trying to balance access to credit with strengthening the resiliency of the housing finance system. Risk-retention rules are an "important part" of that effort, he said.

"Fundamental flaws in the securitization market and the originate-to-distribute model were a key contributor to the housing bubble that helped precipitate the worst recession since the Great Depression," Goldstein said.

He said the final rule will address the major problem seen in the financial crisis: a "lack of alignment of interests between originators and securitizers relative to investors." (Reporting by Margaret Chadbourn; Editing by Ramya Venugopal)

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Geithner: mortgage costs to rise with reform (Reuters)

WASHINGTON (Reuters) – Treasury Secretary Timothy Geithner said on Tuesday that future mortgage costs likely will be "modestly higher" after reforms are completed to the national housing finance system.

Testifying before the House Financial Services Committee, Geithner said it will take some years to complete an overhaul of the system and to wind down Fannie Mae and Freddie Mac but said it was important for lawmakers to begin the effort.

Geithner said housing markets were "still in a very difficult state" and cautioned that the administration and lawmakers must be careful not to jeopardize a broader economic recovery while dealing with housing finance reform.

(Reporting by Glenn Somerville, Editing by W Simon )

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