What We're Hearing

In less than 24 hours the nation will know how far below the 2% minimum capital threshold the Federal Housing Administration's single family insurance fund has fallen. To date, FHA commissioner David Stevens has maintained that the agency will not need a government bailout a la Fannie Mae and Freddie Mac. The insurer is tightening its loan guidelines and cracking down on what it feels are sleazebag lenders using the government eagle. One thing can be said in FHA's defense -- at least it hasn't been backing high balance 'liar loans' like the private sector did during the 2003 to 2007 boom. And unlike Wall Street, FHA actually requires lenders to underwrite the loans they fund. Of course, with home prices falling between 20% and 50% in some once hot markets the past two years, it stands to reason that FHA's book-of-business will indeed suffer. Meanwhile, by now you've seen the reports that Goldman Sachs is talking to Fannie about buying $1 billion worth of low-income housing tax credits from the government-controlled GSE. Fannie cannot use the credits because, well, you need to actually earn money to use such an off-set. Goldman, on the other hand, is making money hand-over-fist. For the nation's tax collectors the issue might boil down to this: if we let Goldman buy the tax credits (at a discount) that means a Wall Street firm that received TARP money will be able to pay Uncle Sam less money in taxes at a time when Uncle could really use the money...