President Obama’s fiscal 2013 budget proposal touts the administration's recent long-shot mortgage refinancing proposal and says the White House's increased emphasis on the housing crisis will lead to larger taxpayer losses from a 2008 emergency bailout fund.
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The budget, as expected includes a call for broadening the availability of refinancing options for borrowers who are current on their mortgages but owe more than their homes are worth. The administration said it plans to finish doling out unspent funds for housing assistance, which is likely to increase the costs of the emergency financial bailout by $20 billion -- something that is likely to generate criticism from Republicans for increasing taxpayer costs.
Chief among the problems with Obama’s refinancing ideas is that the budget renews calls for a bank tax as a way to help pay for the latest housing initiative. It is a funding idea that has repeatedly gone nowhere on Capitol Hill and has even worse chances of moving in a divided Congress in an election year.
The proposed fee would generate $61 billion over 10 years. The budget said the fee would help “offset the cost of the President’s new, broad-based mortgage refinancing program which is designed to help homeowners who are still suffering as a result of the financial crisis.”
The big banks are blamed for helping fuel the financial crisis and for benefiting from the 2008’s Troubled Asset Relief Program emergency $700 billion financial bailout, so the fee is envisioned to help make up these costs.
But the administration’s goal of spending all of the $45.6 billion set aside for housing initiatives under TARP will likely drive up the ultimate cost to taxpayers of the TARP program to $68 billion from last year’s projected $48 billion.