Today’s Washington Post includes an article on the Federal Housing Administration’s (FHA) soon-to-be-released annual audit, which, according to FHA Commissioner David H. Stevens, will appear dire because it offers only a snapshot of the agency’s financial standing at the depths of the recession and does not take into account new loans the FHA will insure or has made to more creditworthy borrowers. In addition, FHA officials have assured Congress that the agency will not need a taxpayer bailout. FHA’s complex funding mechanisms do not require the agency to turn to Congress if it cannot cover losses on loans because the agency has been drawing on money it deposited with the Treasury Department.
“It is absolutely a myth that they would have to go to Congress for money,” said Marvin Phaup, a former budget analyst at the Congressional Budget Office and now a budget expert at Pew Charitable Trusts. “The FHA has permanent authority to get money from the Treasury because it is backed by the full faith and credit of the federal government.”