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Republicans Pledge to Probe Home Loans for the Poor

Edward Luce, Financial Times
Monday, 18 Oct 2010 | 9:36 AM ET

The Republican party will launch aggressive inquiries into alleged abuse of mortgages for low-income buyers if it takes control of the House of Representatives next month.

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Darrell Issa, who would head the lower chamber’s main investigative committee, told the Financial Times in an interview: “We should look at financial entities and either reform them or kill them.”

The conservative Republican from California, who would become chairman of the powerful Houseoversight and government reform committee, said hearings would focus on whether the federal government should be involved at all in sponsoring home loans for the poor.

The investigations would centre on the roles of Fannie Mae and Freddie Mac, the nationalised government-sponsored lending institutions, which Republicans say contributed strongly to the 2008 meltdown by promoting subprime lending.

Mr Issa said the role of Countrywide, the bankrupt subprime lender, would also be investigated.

He did not spell out whether he would investigate alleged connections between subprime lenders and Democratic politicians.

“We need to look not only at the failure of Freddie and Fannie but even after that whether the federal government should be involved in financing home loans at all,” Mr Issa said.

“By promoting these loans we have artificially raised the price of homes – it is anti-wealth creating. The problem still hasn’t been addressed and everyone assumes it’s a system we are going back to.”

However, Mr Issa, who would replace Henry Waxman, the California Democrat, if the Republicans win next month, tried to play down talk there would be a witch-hunt of the Obama administration, as many Democrats are predicting.

He also shied away from parallels with 1995 when Newt Gingrich, the Republican Speaker, went head to head with the Clinton administration – and lost.

“Newt was engaged in shutting down the government,” said Mr Issa.

“My committee will be about opening up the government. I think [Barack] Obama would love to get in the same situation as [former president Bill] Clinton, where he can blame the Republican House. If I have a toe-to-toe with Obama it will be about the American people’s right to know. My job is to chase the failure of bureaucracy beneath Obama.”

Examples of the type of investigations that would “open up government” included looking into the role of the department of agriculture in regulating the food industry.

Mr Issa also said he would investigate the Wikileaks disclosures, which he said “animated him at a time when we are at war”.

And he spoke vaguely about “looking into dangers to democracy, dangers to the well-being of people and issues that distort democracy”.

Elsewhere, Mr Issa has hinted he would investigate last year’s “climategate” scandal as part of the alleged “politicisation of science”.

And he has also mentioned the White House’s alleged role in trying to interfere in Democratic primary elections to influence challengers to drop out.

“If you have the power of subpoena, then your letters get answered,” he said.

“People say: ‘Issa will serve 1m subpoenas’. Well no. We won’t need to do that. Just having the power of subpoena should be enough to bring in the whistle- blowers.”

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