Bankers Press Hill to Back Mortgage Protection

House Republicans who don’t want taxpayers covering defaults on home mortgages anymore have hit opposition to their proposed reforms from a longtime GOP ally: the home-loan industry. The Wall Street Journal reports that mortgage investors and bankers are pressing lawmakers to preserve the U.S. government’s backing of housing finance.

“If I were the industry, I would be doing the same thing because I would love to make loans and if they failed, let the taxpayers make up the loss. That’s a pretty sweet deal,” Rep. Spencer Bachus (pictured) said at a hearing last September, before the Alabama Republican became chairman of the House Financial Services Committee.

Industry representatives say they need government guarantees to keep interest rates on loans affordable and ensure that loans are available during downturns.

But many Republicans say the government’s two big mortgage guarantors, Fannie Mae and Freddie Mac, are to blame for the foreclosure crisis because they promoted lending to unqualified buyers -- and are now looking for their own taxpayer bailouts after losing billions mortgage defaults.