Sunday, August 1, 2010

Volcker and Paulson Weigh in Against Fannie, Freddie, Homeownership Subsidies.

Paulson in Washington Post HERE:
We should go further and reduce the subsidy for homeownership that helped create the crisis. The central place of homeownership as part of the American dream reflects a bias of our society that is unlikely to simply end. Policymakers may well decide that we should continue to facilitate lower-cost mortgages through a subsidy to mortgage credit guarantors. Even so, the scope of the subsidy should be reduced by rationalizing and reducing the missions of the FHA and the successor(s) to Fannie and Freddie. I would recommend limiting the availability of the subsidy to smaller mortgages or lower-income buyers or both. And the price the government charges this new private-sector entity for its credit guarantee must be high enough to leave room for a robust private-sector mortgage market that serves taxpayers and homeowners equally.
 Volcker in Smart Money HERE.
...Almost all the mortgages made now are insured by the government, bought by the government, and the guys at Fannie Mae and Freddie Mac are the market.
Not much exists without the government running it. I don’t think that’s what we want. A lot of problems surround the whole mortgage market. It’s clear Fannie Mae and Freddie Mac need to go. We don’t need these hybrid institutions.
Will be interesting to see what specific measures the National Commission on Fiscal Responsibility and Reform comes up with by their Dec. 1st deadline.

Originally created and posted on the Oregon Housing Blog.

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