12:00 AM » Hearing Shows 'High Risk' FHA is a Threat to Hardworking Taxpayers
Just one day after the Financial Services Committee held its second hearing in as many weeks on the shaky finances of the Federal Housing Administration (FHA), the Government Accountability Office (GAO) announced it has added the FHA to its list of "High Risk" government programs. Every two years, GAO identifies programs that are at "high risk due to their greater vulnerability to fraud, waste, abuse and mismanagement or the need for transformation" to become more effective or efficient. Chairman Hensarling quickly put out a statement saying the designation "reinforces everything our committee has been saying about the FHA for some time now - it is a high risk to taxpayers, it is a high risk to the mortgage insurance market and it represents a high risk to our economy." This week's hearing with Commissioner Carol Galante came amid growing concerns that the FHA will require a taxpayer-funded bailout and that FHA has strayed far from its historical mission of helping first-time homebuyers, low- and moderate-income families and higher risk borrowers who are otherwise creditworthy. Today, the FHA has expanded its role to offer insurance to millions of Americans, using many of the same practices employed by subprime lenders at the height of the housing boom-turned-bust. As a result, the FHA is potentially hurting those it was designed to help. Watch the recap of this week's hearing below.