The Future of the Federal Housing System

I want to make the argument that government-backed securitization—i.e., something approximating the core functions and parameters of the much-maligned government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac—is necessary and prudent for the future of housing finance reform. To do so, I want to convince you of three propositions that I think are clearly correct and have not been widely acknowledged. These arguments, with a large amount of additional supporting evidence, are fleshed out in much greater detail here.

First, the federal government’s high degree of involvement in housing finance is neither a recent nor unique phenomenon. Since the New … Read more