By Edward Pinto
Today the Obama administration will begin a
discussion on how to overhaul our nationalized housing finance system.
Moderated by Treasury Secretary Timothy Geithner and Shaun Donovan,
secretary of the Department of Housing and Urban Development (HUD), the
"Conference on the Future of Housing Finance" seeks answers to what
went wrong in the U.S. housing market. This promises to be the next big
domestic policy debate—one that could mold housing finance for a
generation or more. But the early signs of where policy makers might be
headed are not promising.
A consensus is building around a
three-part grand bargain:
- An explicit federal guarantee of a large portion of the mortgage-backed securities created to finance American's home mortgages;
- A tax on these securities to fund low-income housing initiatives; and
- A requirement that issuers of securities meet affordable housing mandates.
This is a dead end for two reasons. First,
while supporters of an explicit federal guarantee tell us it will
never be called upon, Americans have read this book before and know how
it ends.
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