July 1st, 2008
07:00 PM ET

Housing crisis worse, Congress takes vacation

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/07/01/art.foreclosures.jpg]
Ed Henry
White House Correspondent

If you're taking some well-deserved rest for the Fourth of July, you are probably getting at best a day or two off around the actual holiday itself. Only in Congress could a break for the "Fourth" become a vacation spanning more than a week.

The Democratic-run Congress shut down last Friday and is not returning to work until next Monday. Between now and then, the New York Times notes in a blistering editorial Tuesday, another 55,000 homes will sink into foreclosure.

Yet the Senate left town Friday without passing a long-awaited housing rescue bill that would allow homeowners on the edge to get new mortgages backed by the federal government. The catch is that the existing lending institution would have to agree to cut the existing mortgage balance down to 85 percent of the home's value.

Between Republican fundraising events, President Bush is in Little Rock today at a credit counseling agency and is expected to prod Congress to finish the legislation. But even if it did, the President has threatened to veto the current bill... because he does not believe it does enough to reform the Federal Housing Administration.

In fairness to Democrats, the housing bill stalled after a Republican, Sen. John Ensign, insisted the Senate tack on a package of tax breaks for renewable energy. Besides the fact that really has nothing to do with the housing crisis, Ensign had no way of paying for the tax cuts so it would run afoul of budget rules in the House, thereby making it even more complicated to pass a final product.

Sound like a mess? It is.

So some local communities, fed up with Washington, have decided to take matters into their own hands and implement their own reform plans.

Fairfax, Virginia, for example, has an innovative plan known as the "Silver Lining" proposal. The chair of the county commission, Gerald Connolly, is having the local government buy up foreclosed properties so it can eventually sell them at low prices to police officers and firefighters currently priced out of the area.

And there's a twist: Connolly himself is now running for a seat in Congress. Maybe if he wins he can bring some fresh ideas to Capitol Hill.

Editor's Note: See Ed's full report on AC360 tonight at 10PM ET.

soundoff (32 Responses)
  1. Rob, Detroit

    They should stay at work and "fix" the problem? LOL! They are the authors and architects of most of our problems by virtue of their solutions in the first place; their solutions are the root cause of future problems. There is always some horrible real or imagined problem, or "crisis" that must be addressed by government. What is missing from the equation is any realization on their part of unitended consequences, or comprehension of cause and effect. How about root cause analysis? No way. Our arrogant, obtuse, professional looters of the taxpayers are too busy playing masters of the universe and benefitting some at the expense of others to win re-election.

    What exactly do we expect a bunch of economic ignoramuses in congress to do anyway? Considering the track record, we would be better off if they did nothing. The current situation is the result of them doing something.

    July 2, 2008 at 9:40 am |
  2. Jovan

    Excuse me you all. However, let me throw some simple concepts/questions out there for you :
    1.) Money doesn't grow on trees...
    "new mortgages backed by the federal government." <- this is u.s tax payer dollars
    2.) Since when is it a sin to rent an apt. because you can't afford a home? The rest of us do it.
    3.) What makes it fair for tax payers to bail out your investment mistake?
    4.) This is not a huge tragedy. If you can't afford your home.. You get kicked out and can go on renting.. The housing market gets further flooded with supply, prices go down, and people who have been sitting sidelined while people who couldn't afford homes bid up up prices are able to buy the home that they couldn't afford (this is fair).
    5.) The pool of money known as tax payer dollars is not there to bail out people from their investment decisions. You are not entitled to a home just because you live in America nor should people be allowed to bid up home prices w/ credit they shouldn't of had in the first place.

    My background :
    I am a 24 year old African American who considers himself a democrat... But I remain neutral in my party affiliation. You want a home? Save up and have 20% to put down and buy only when you have stable income for 6-12 months and a reserve of money in case of an emergency. It's obvious the mess that ensues when you don't.. However, Tax payers don't owe you people anything who are loosing their homes. Take this as a lesson learned, rent, and act like you have sense the next time you make a purchase regardless of access to free credit gives you this sudden idea that you a 'rich'. Bush is right in vetoing this bill and I hope he strikes it through the floor

    July 2, 2008 at 9:10 am |
  3. Mr.huh?

    The government largely created the housing crisis by legislating an inflationist bubble through the Federal Reserve. Don't ask them to get something done. If Congress took a whole lot more vacations like this than we really could celebrate Independance Day.

    July 2, 2008 at 9:08 am |
  4. renting

    Outside of the "vacation" they're taking, why should they do anything?
    You took on a mortgage you couldn't afford and priced people like me, who actually live within their means, out of the market. Now that it's crashing you want to use MY tax dollars to bail YOU out of your idiotic, greedy splurging. Forget it. You made this mess. Let it crash. Crash down to a reasonable level so that people can actually afford to own again, that is. You only have yourself to blame.

    July 2, 2008 at 8:58 am |
  5. Sandra

    I hope they don't sign it. The only folks going to benefit from it are the banks who ran this scam. Force banks to give people their money back! We should not have to pay for this!

    July 2, 2008 at 8:52 am |
  6. Tim

    How about Congress takes a vacation and then never comes back? Along with the rest of our gigantic government and alphabet soup bureaucracies. July 4th would be a great and true celebration then.

    July 2, 2008 at 8:41 am |
  7. B Kibbey


    I'm glad their on vacation, they do much less damage that way. The housing "crisis" is not a disease that innocent people got while they were working hard. The housing crisis was brought on by greedy bankers and stupid home buyers. I don't want one cent of my hard earned money that I send in taxes spent to help the stupid. Why on earth would anyone support rewarding such stupidity. THE GOVERNMENT DOES NOT EXIST TO PROTECT IDIOTS FROM THEMSELVES. Let them be foreclosed on, I have some sympathy, but hopefully they will learn a valuable lesson from it and never find themselves in that situation again.

    I sure would like my mortgage company to cut the amount of money I owe on my house but I won't get that benefit because I made the grave mistake of living within my means and paying every payment on time. Why don't you people find this absurd like I do? What am I missing here?

    July 2, 2008 at 8:39 am |
  8. remowill

    I don't think it is the housing crisis that is the only problem. The high price of oil, caused by the omnibus bill that allowed regulation by the CFTC to stop, is causing foreclosures as well. Business are going bankrupt and you won't be able to heat your home this winter unless you can afford 600 dollars a month for natural gas or 1000 a month for heating oil.
    It is just cheaper to walk away now, while your credit is still good and get an apartment to live in.
    Congress should stay in session until all these problems are worked out. But they have cradle to grave healthcare, paid for by the people. In a time that 50 million taxpayers can't afford healthcare. They drive cars that are paid for by the people. They live in houses that are paid for by the people. Why shoud they care?

    July 2, 2008 at 8:34 am |
  9. Antonio

    The government is the reason for the bubble in the first place and you people want them to go in, interfere more, and try to fix it? The only fix is to let the malinvestments liquidate and let the market stabilize. We want Congress to do less, not more.

    If they are going to pass any legislation in which to help this situation it would be to repeal the Federal Reserve Act of 1913 and everything connected to it. Stop manipulating the interest rates and stop borrowing and turning to the printing press when we can't afford things.

    July 2, 2008 at 8:33 am |
  10. brian

    i hope their vacation is so good, they decide to stay away forever. at least if they don't come back, they can't create more problems like they did with the housing crisis.

    July 2, 2008 at 8:30 am |
  11. Isabel

    "Typical" that is all I can say. It is so predictable that this kind of thing happens.People in the US need to wake up, stop shopping at Wal-Mart and the Dollar store. We all need to get together and send all of these useless overpaid power mongers a message and kick their fat asses out of office. Until we all decide to stop trying to keep up with the "Jonses" and stop buying usless crap, NOTHING and I mean NOTHING is going to change. We can all cry and hu-hum but action is what makes a difference not just complaining. So I say talk to your families talk to your friends and educate yourselves so that we can clean up this Country for good. Oh, yeah, also we need to stop voting our pledged party and vote for the person who we believe will do a good job. Republican, Democrat, Independent, whatever it should not matter, what matters is the charachter and substance of the candidate.

    July 2, 2008 at 8:27 am |
  12. Tom

    You're upset that Congress isn't wasting tax payer dollars bailing out gamblers and fools?

    We would all be better off if the US Government took the rest of the year off. They've done enough damage for one calendar year to suit me, thanks.

    July 2, 2008 at 8:07 am |
  13. larry c

    i know the demlibs are a do nothing bunch of whiners. when did it become the government's job to pay the house payment for the people that took out the loan? these people should never ever try to buy a house again. its not the government job to pay for all these igorant people bad choices. you live and learn.

    July 2, 2008 at 5:58 am |
  14. Michele


    July 2, 2008 at 4:49 am |
  15. Tavish

    I just think it ridiculous that congress could go on vacation during this crisis without finding a solution!

    July 2, 2008 at 3:02 am |
  16. David

    At a cost of $300bn, it's probably a good idea they left without passing this.

    July 2, 2008 at 1:45 am |
  17. Hoyt, SC

    I think it is a crying shame that we cannot get Congress to get off their butts and do what we elected them to do. Once elected, they forget about all of the promises made during their campaign.

    We sit on more oil reserves than any other country in the world, yet we do not drill. Both parties are so afraid one is going to get something done before the other does, so nothing is accomplished. I am sick and tired of this. How can we hold them accountable? Moreover, the environmental nitwits are too worried about the caribou, than our economy, so again, we do not drill.

    How do we take this country back?

    July 2, 2008 at 12:45 am |
  18. Kimberly

    I agree with Jim. Why are we bailing out the people who bought homes knowing they could not afford them down the road. They either didn't pay attention or hoped prices would continue to climb and they would be able to refinance and sell. Guess what, that is called a GAMBLE! Sometimes when you gamble you LOSE! It seems unfair that those who did not buy into all this sub-prime nonsense and continued to rent knowing what would eventually happen and those that bought only houses they could actually afford are the ones who are not going to get ANY help at all. I say, let congress stay gone. They don't get anything worthwhile done while they are there anyway.

    July 2, 2008 at 12:36 am |
  19. Alex

    Come on folks....what did you expect from this disfunctional group of Politicians led by Harry Reid & Nancy Pelosi? These characters couldn't do "the right" thing even if it was plastered all over their list of things to get done. And soon we can expect an even larger group of Democratic members when five Republicans won't seek re-election. For that matter, the Republicans aren't any better either. Does anybody think things will get any better? I wouldn't hold your breath if I were you! What a sad group of so called leaders.

    July 2, 2008 at 12:26 am |
  20. Jim, Bishop, Calif

    Congress plays while Part of the nation burns, another part is underwater, The price of gas is going higher than a jet propelled Kangaroo, The stock market is on a greesed pole to hell, houses being forclosed left & right. what else is new?

    July 2, 2008 at 12:07 am |
  21. chuck batson

    No one asked the owners over spend. Home owners went in knowing the rules and now they are trying to break the rules. Did they sign an agreement with the terms of ownership or did they get their homes gifted to them? Make a choice live with the results....to much welfare!

    July 2, 2008 at 12:03 am |
  22. Oscar

    You know as much as people want to Bash Dems I dont see any Reps there either. You know they have a choice to be there or not. So maybe we should be upset at both parties ? Because last time I checked there was two parties not just one. The fact is isnt it a Rep that is blocking the bill ? Didnt Bush say he was going to VETO IT as soon as it hit his desk ? So getting it passed and veto before the 4th was going to help homeowners how ? Blame the Dems all you wish Bush already publicly said he was going to veto it.

    July 1, 2008 at 11:44 pm |
  23. Paul

    The Congress takes way too many vacations and when they ARE there, they are passing resolutions that congratulate sports teams, etc. ALL THE WRONG LAWS!!!

    The law that needs to be passed is one that puts restrictions on the house prices banks can offer for foreclosures. The banks loan money to people who really can't afford it (I know since I was in the industry) and then when the house is foreclosed on, they sell the house at ridiculously low prices. That puts other borrowers upside down the causes them to walk away from their house. The cycle goes on.

    The Congress needs to handle this properly.

    July 1, 2008 at 11:35 pm |
  24. Victor in Saanich, B.C. Canada

    Hey, while they are away, sell their 'House'!!
    After all their incompetence, none of you can be surprised can you!!

    July 1, 2008 at 10:00 pm |
  25. Susan


    Throw the bums out !!!! This is why there should be term limits. None of our representatives should be able to go to Washington and get life time jobs. They all get caught in the power culture of Washington and they never seem to get anything done. It does not matter if you are a D or an R or who is the majority party in power.

    It did not take them long to vote in favor of bailing out Bear Sterns and it was also very bi-partison . I guess we know WHO or WHAT is important. It would appear that we the people who have elected them are not.

    Congress and President Bush must be in competition to see who can have the lowest approval rating. I think it is close. Stay tuned !!!


    July 1, 2008 at 9:14 pm |
  26. Kathy, Chicago

    They are all in parades for the 4th. I was asked to join in our local parade and carry a sign. Congress will be pressing the flesh, getting the jump on Nov. Maybe we need to fire everyone and start over.

    July 1, 2008 at 9:07 pm |
  27. jim

    I have no sympathy for home owners lost their homes due to the sub prime crisis or speculators trying to flip houses. Congress should take no action and let the chips fall as they may. Remember the housing crisis in the worst presidents term Jimmy Carter. Nobody lifted a finger to help them get out of their 20% interest loans.

    July 1, 2008 at 8:43 pm |
  28. Larry

    They can do what they want, they're the Obama party; no pun intended:)

    July 1, 2008 at 8:29 pm |
  29. Annie Kate

    I can't believe that Congress went on holiday leaving this urgent important issue unresolved. Their actions or lack of action in this case shows their obvious disregard for the lives of their constituents.

    How do these people keep getting elected? What's even more troubling is that they tack onto the bill other items which will cause the President to veto the whole bill – a bill for dealing with the mortgage crisis should have just that on it and nothing else – its too important to play the same old political games with. Congress needs to start helping people instead of playing the same old political games.

    Annie Kate
    Birmingham AL

    July 1, 2008 at 8:29 pm |
  30. JC- Los Angeles

    Our nation's leaders continue to reach newfound depths. I'm sure many will enjoy a relaxing weekend in their second or third homes made available by taxpayers. Similar to the Bear Stearns bailout, my gut tells me the Federal Government paid Bank of America to buy Countrywide and then went on holiday. By getting the deal done, they hide the real contagion, the abhorant fraud and the countless sweetheart loans. Now they can focus on their real concerns: cocktails, golf, boating, pastels and bird-dogging.

    July 1, 2008 at 7:34 pm |
  31. Heather

    Im a Democrat however I am a tax paying citizen first. Its seems the Dems are taking their political power for granted. Forclosure is not a issue to be politicized. There are lives hanging in the balance. It would be like people sick with a mass illness waiting to be seen at the hospital and the doctors figure out how to treat it but decide to all go home for the weekend. Politicians are put in office to serve the people not themselves. Pres Bush in this case is right. I cant believe I just said that but its true.Well I guess they better be prepared for the rise of Lou Dobbs independent voters to vote them out of office.

    July 1, 2008 at 7:32 pm |
  32. Maritza

    Further example of a liberal democratic useless congress, lead by the all talk no action Nancy Pelosi, count the number of times they leave early, are on vacation when an important urgent vote is needed, she has no room to talk , she's quick to attack the President , on any range of issues ,however by way of leadership , and dedication to actual" work" fails to prove how much she cares about the American people as she often refers to.


    July 1, 2008 at 7:21 pm |