Monthly Archives: January 2012

Recent actions against Fannie Mae and Freddie Mac by the Securities and Exchange Commission (SEC) also produced the standard reaction by GSE apologists. The New York Times ’Joe Nocera was quick to denounce the SEC, arguing that Fannie and Freddie were late to subprime. While I agree that the SEC case is likely a weak … Continue reading

The new Consumer Financial Protection Bureau in many ways exemplifies the problem with the Dodd-Frank financial reform: It ignores the underlying causes of the financial crisis while pursuing an unrelated partisan agenda. Advocates of the new agency argue that regulators put too much emphasis on banks’ safety and soundness at the expense of consumer protection, … Continue reading

Yes, there has been no entity more central to inflating the housing bubble and rescuing banks during the crisis than the Federal Reserve. At the heart of these errors has been a departure from the Fed’s mandate of keeping credit and money growth in line with the real economy. Much is made of the Fed’s … Continue reading

As the economy remains stalled, and the election draws closer, the Obama administration seems increasingly willing to consider proposals that will further distort the housing market and seem to have the ultimate goal of preserving a major role for Fannie Mae and Freddie Mac — the two giant government sponsored enterprises at the core of … Continue reading

Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic ArmageddonBy Gretchen Morgenson and Joshua RosnerTimes Books, $30.00, 352 pages The government did it — cause the economic meltdown. Of course, there were other factors. But in Reckless Endangerment, reporter Gretchen Morgenson and analyst Joshua Rosner point the biggest finger at Fannie Mae and … Continue reading

The United States’ market-government hybrid mortgage system is unique in the world. No other nation has such heavy government intervention in housing finance. This hybrid system nurtured the excessively risky loans, financed with too much leverage, that fueled the U.S. housing bubble of the last decade and resulted in the systemic collapse of the global … Continue reading

The stability of D.C. prices can be found in one word: government — although in more ways than you think. Prices are ultimately driven by supply and demand, and government has had a major impact on both. The most important driver of housing demand is income, which is driven by jobs. While the rest of … Continue reading

Sunday’s Washington Post, the daily record of the political class, contains some fine reporting on the malfeasance of that class. Leading the paper and the website is a big investigative story titled “Million-Dollar Wasteland.” Reporters Debbie Cenziper and Jonathan Mummolo write: The federal government’s largest housing construction program for the poor has squandered hundreds of … Continue reading

The federal government recently placed Fannie Mae and Freddie Mac, the government chartered, privately owned mortgage finance companies, in conservatorship. These two massive companies are profit driven, but as government-sponsored enterprises (GSEs) they also have a government-mandated mission to provide liquidity and stability to the U.S. mortgage market and to achieve certain affordable housing goals. … Continue reading

As Congress begins debating the future of Fannie Mae and Freddie Mac, proponents of keeping the taxpayer on the hook for the mortgage market argue that without such support the 30-year fixed-rate mortgage would disappear. The advantages of the 30-year mortgage have, however, been grossly exaggerated. Subsidizing it should not serve as an excuse for … Continue reading