Amid a fierce debt ceiling debate on Capitol Hill, the U.S. Congressional Joint Economic Committee held a hearing on Wednesday afternoon to examine how a U.S. default crisis “would harm American families and businesses,” but it was one interaction on a separate issue toward the end of the hearing that had one Republican senator outraged.
During an exchange with Dr. Wendy Edelberg, a senior fellow in Economic Studies at the Brookings Institution, Sen. Eric Schmitt, R-MO, asked Edelberg about new rules enacted by the Federal Housing Finance Agency (FHFA) under President Biden that have attracted recent controversy.
“There’s a new proposed rule by the Biden administration to punish people who actually have a good credit rating [….] to actually pay more for their mortgage, to subsidize mortgages for people who have lower credit scores. Do you think those are appropriate incentives that we ought to encourage?” Schmitt asked.
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“I apologize. I’m not familiar with the executive order,” Edelberg, who is the director of The Hamilton Project, responded.
“If you have a good credit rating, you will pay more for your mortgage to subsidize mortgages for people with poor credit ratings. Do you think that’s good policy?” Schmitt said.
“We use housing policy in this country and mortgage policy in this country and in all sorts of complicated ways and part of it is redistributive. Think about the support that we offer to [Federal Housing Administration],” Edelberg said in defense of the policy.
“I can believe that one of the policies that we would want to incorporate into the enormous federal support for mortgages and homeownership in this country includes redistribution to spur homeownership among lower income communities,” she added.
This exchange prompted a comment from the Senior House Democrat on the Committee, Rep. Don Beyer, D-VA, who challenged Schmitt on the rule.
“When you asked her about this new rule, she said she didn’t know about the rule. I pay great attention. I’ve never heard of this rule. It sounds like a QAnon rule,” Beyer said, referencing a right-wing conspiracy group.
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Beyer’s comment seemingly caught Schmitt off guard.
“Excuse me Mr. Chairman – what did you say?”
“I said that this sounds like a QAnon rule,” Beyer answered.
“Okay, well, unless Joe Biden’s a member of QAnon, I would encourage you to look at the rule,” the Missouri senator charged before Beyer agreed to investigate the rule.
The new mortgage rules – which took effect May 1 – have received widespread criticism from housing experts since its introduction, with some calling it “a recipe for disaster.”
One such expert critical of the idea was Nest Seekers chief economist Erin Sykes.
“It’s an idea of fairness. It’s really the responsible people who have done the right thing, who have kept their credit in check, they’re being hit with yet another fee,” Sykes told FOX Business’ Jeff Flock.
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Republicans in the House and Senate – including Schmitt – have vowed to fight the rules, with one House Republican even introducing legislation to repeal the regulation.
In response to criticism on the subject, FHFA Director Sandra L. Thompson released a statement last month, writing, “Unfortunately, much of what has been reported advances a fundamental misunderstanding about the fees […] To be clear, the series of steps taken by FHFA to update the Enterprises’ pricing framework will bolster safety and soundness.”