“Real recovery is not likely until both Fannie Mae and Freddie Mac are replaced by a new housing finance system that does not include government distortions of the market.”
Time to End Fannie and Freddie
By Heritage Foundation Mike Brownfield——Bio and Archives--July 14, 2011
Four years after home values in America plummeted, fears over America’s housing market remain. In testimony before Congress yesterday, Federal Reserve Chairman Ben Bernanke cited “the continuing depressed condition of the housing sector” as one of the factors behind America’s sagging economy. In response to the poor market, the White House is reportedly considering a repeat of the historically bad decisions that contributed to the mortgage meltdown rather than pursuing a much saner course: eliminating Fannie Mae and Freddie Mac.
In a town hall last week, President Obama remarked that “the continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected.” So what’s he planning to do about it? The Wall Street Journal reported Monday that the White House may have “taxpayer-owned mortgage giants Fannie Mae and Freddie Mac relax their rules for loans to investors” as one way to tackle the housing slump.
For those with short memories, Fannie, Freddie, and government policies aimed at making it easier for people to purchase homes is how the housing market wound up in its current state. And that state isn’t a pretty one. In the years since housing prices peaked in the second quarter of 2007, the value of household real estate has fallen by about $6.6 trillion—30 percent—and it continues to fall.
Full article
The Heritage Foundation is the nation’s most broadly supported public policy research institute, with more than 453,000 individual, foundation and corporate donors. Heritage, founded in February 1973, mission is
to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.
