The Trump administration has finally turned its attention to housing policy. Unfortunately, the president’s Memorandum on Housing Finance Reform, issued last week, is a major disappointment. It will keep taxpayers on the hook for more than $7 trillion in mortgage debt. And it is likely to induce another housing-market bust, for which President Trump will take the blame.
The memo directs the Treasury to produce a government housing-finance system that roughly replicates what existed before 2008: government backing for the obligations of the government-sponsored enterprises Fannie Mae and Freddie Mac , and affordable-housing mandates requiring the GSEs to encourage and engage in risky mortgage lending.
An administration that believes in deregulation should do better. The Trump administration could have used its control over the Federal Housing Finance Agency—the regulator and conservator of Fannie Mae and Freddie Mac—to shrink their footprint dramatically over five to 10 years.
Deregulation would bring prices back down to the level where most people could afford to buy and pay off a house.
This is exactly why deregulation will never be allowed to happen. The whole point of the mortgage market is to compel people to become obedient servants by threatening to take away the place they live if they fail to obey the boss.
The money is just an abstraction which obscures the fundamental reality of masters and servants.
The Trump administration has finally turned its attention to housing policy. Unfortunately, the president’s Memorandum on Housing Finance Reform, issued last week, is a major disappointment. It will keep taxpayers on the hook for more than $7 trillion in mortgage debt. And it is likely to induce another housing-market bust, for which President Trump will take the blame.
The memo directs the Treasury to produce a government housing-finance system that roughly replicates what existed before 2008: government backing for the obligations of the government-sponsored enterprises Fannie Mae and Freddie Mac , and affordable-housing mandates requiring the GSEs to encourage and engage in risky mortgage lending.
An administration that believes in deregulation should do better. The Trump administration could have used its control over the Federal Housing Finance Agency—the regulator and conservator of Fannie Mae and Freddie Mac—to shrink their footprint dramatically over five to 10 years.