The Obama Administration has finally started to do something relatively serious about the housing crisis by using the tool of executive authority it has over Fannie Mae and Freddie Mac. Unfortunately, the plan seems to depend heavily on enriching large corporate middlemen. The Wall Street Journal explains:

One proposal would sell packages of hundreds or thousands of foreclosed properties in bulk to investors that agree to rent them out. That approach is preferred by the Department of Housing and Urban Development, which is taking back properties as defaults mount on loans backed by the FHA.

Another approach would let investors enter joint ventures with Fannie or Freddie to invest in a pool of converted rental homes. A national property-management business would handle day-to-day landlord responsibilities.

While I share Kevin Drum’s skepticism, if done right it will provide some help. It doesn’t make sense to have a company that manages only one or two rental homes, so there is a logic to giving a company a bulk discount if they purchase 50 homes and legally commit to keeping the properties from becoming blighted.

Empty homes are a serious problem for neighborhoods. They can increase crime, cut surrounding home values, and reduce local government revenue. If this bulk sale to managements companies was simply one small part of the Obama Administration’s effort trying-everything-possible to fix this serious problem, I might accept that a few companies getting a sweet deal from the federal government is a price worth paying to get this pressing problem fixed quickly.

What is really upsetting though, is that this isn’t part of a big plan to try everything. There are more effective ways to manage this housing problem, ones that the Administration could do right now, ones that don’t require giving big corporations handouts or special discounts. As Dean Baker suggested, the government could just allow people whose mortgages are held by the government and are in default to rent their homes at market value. It would be quicker to implement and would likely affect far more homes, instead the administration is solely focused on this big corporation solution.

It is infuriating that the Administration’s entire big new plan to deal with the housing crisis revolves around using private corporate middlemen to indirectly addresses the issue. It’s this insistence by the White House on using unnecessary corporate middlemen to solve any social problem that is one of the things that makes the Affordable Care Act so distasteful.

Unlike the ACA though, you can’t argue that legislative realities forced Obama to go this weird privatization route instead of using a more direct government program. It seem using corporate middle men to address problems is actually how Obama thinks our government should operate.