A Lot More
Observations on housing's wreckage and recovery
In The American Prospect today, I write about the Obama administration’s long-awaited agenda for housing finance reform, which proposes scenarios for winding down Fannie Mae and Freddie Mac in favor of a private sector–driven mortgage marketplace. The administration’s analysis of what needs fixing, and how, is dead right, and the solutions elegantly crafted, yet I can’t help but wonder what they’ll look like when Congress gets through with them. Quoting myself:
Whether homeownership remains a broadly realized institution or becomes a privilege for a relative few depends largely on how far the Obama administration can push Congress to demand broad and fair access to credit for all corners of the country.
“We will work with Congress to ensure that all communities and families — including those in rural and economically distressed areas, as well as those that are low- and moderate-income — have the access to capital needed for sustainable homeownership and a range of rental options,” the Treasury pledges. That’s not just a great idea; it’s an essential one. In fact, this is a restatement of the Community Reinvestment Act. When CRA became law in 1977, it required federal banking regulators to make sure that any federally regulated bank was “meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institution.” Now, the administration wants to apply that principle for the first time to the Wall Street issuers of mortgage-backed securities.
I’m skeptical that Congress will play along. And without a CRA for the post-meltdown era, it’s hard to see how the new housing finance market will be a fair and equitable one.