During the campaign last year, President Trump said a lot of good things about union workers. He visited construction sites to praise the quality of the building trades workers. He went to police and fire stations to tout the courage and commitment of cops and firefighters. He talked about the importance of auto workers and Teamsters. He called them all Trump voters and he is justified in believing they made a difference in his election. Now he must deliver for them.
The Trump administration has been rough on workers, particularly government workers — to put it mildly. For many union members across the country, his anti-immigrant tact has been troubling. So it was only after deep consideration that I decided to work with a coalition, Housing for US, supporting a key Trump proposal: the end of the conservatorships for Fannie Mae and Freddie Mac.
The president can unilaterally direct the Treasury Department to return these two entities to the private sector, some 16 years after a massive government bailout saved them from fiscal collapse and put them into conservatorships. He has signaled he will move forward on this initiative, and he will have our support if it’s a smart plan with proper guardrails to ensure minimal impact on mortgage rates.
For us, the question is not can and should the conservatorships end. We believe that is inevitable, and the sooner the better. Both Fannie and Freddie are as healthy as the have ever been, and after getting a $190 billion bailout in 2008, they have returned $300 billion to the government. It’s time to set them free.
The payoff for working families, for middle-class Americans who have been forgotten in so many ways, comes from the estimated $150 billion to $250 billion the government will make when Freddie and Fannie are released. It is a once-in-a-generation opportunity to deliver for the middle class, for union members and all working families alike, and that is why I am off the sidelines and engaging with this effort.
To end the conservatorships, the government will trigger an initial public offering to raise capital for Fannie and Freddie. It will be the largest IPO in history, and the biggest winner will be the government. Since Treasury got 80% of the shares in these two entities in exchange for the bailout, the government can cash in big time by selling its holdings. Depending on how it’s structured, the government can get 85% or more of the proceeds from this transaction — or at least $150 billion in new, unallocated money.
That’s where the coalition comes into play. We want this money to stay in housing and fuel the largest middle-class housing boom since the post-World War II era. In the last 10 years in New York State, just 4% of all housing built with government support has benefitted the middle class. The big winners have been the top 10% and the bottom 25% of earners, while the middle 65% of earners have gotten crumbs.
Rents are too high, but so are the costs of homeownership. Not just in New York, but in red states and blue states alike. It’s becoming increasingly common for middle-class workers to travel hours to commute to and from work because they cannot afford to live near their jobs. If not that, then young Americans are having their own children, but are still living with their parents because they cannot afford better alternatives. The housing crisis is real and it’s only getting worse.
Trump, a builder whose father built middle-class housing, understands this business. He can use the money from selling Fannie and Freddie shares to create a low-interest loan program for builders, helping them return to build middle-class housing for middle-class Americans and built by American workers. This innovative loan program can be scored for deficit reduction, benefiting both Republicans and Democrats.
I recognize union leaders like me will continue to have our battles with the Trump administration, probably until its final days. But I will not let that stop me from working with his administration on this effort. The stakes are too high for the members I represent, and the payoff for the working middle-class across the country is too great to pass up.
It’s time to free Fannie and Freddie and put the proceeds to build workforce housing. That is how the president can deliver for the “Trump voters” he promised to fight for during the campaign.
LaBarbera is president of the Building and Construction Trades Council of Greater New York, an organization of local affiliates of 15 national and international unions representing 100,000 members.
