The De Facto Nationalization of the U.S. Housing Market

By Joseph Lawler

The U.S. housing market still needs life support from the government, ProPublica's Jesse Eisenger reports: "without the guarantees and other support the government provides, the housing market would barely be functioning now." Eisenger argues that the current state of affairs is a de facto nationalization of the housing market, and presents this chart as evidence:

According to Inside Mortgage Finance, 9 out of 10 new mortgages are backed by the federal government, with Fannie Mae and Freddie Mac providing most of the guarantees.

Eisenger suggests that this situation, in many ways, is the worst of all worlds. Although the government is overwhelmingly active in the housing market, its involvement is not driven by any overarching goal or strategy. In fact, different parts of the government have conflicting policies in place: the administration has tried, off and on, to use various means to provide stimulus and debt relief, while the regulator in charge of Fannie and Freddie has sought to maximize their financial security. Meanwhile, Congress has raided the two government-sponsored enterprises' revenue streams to fund unrelatedly legislative efforts on more than one occasion.

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

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