Thursday at the American Enterprise Institute [1] (AEI), a public policy think tank dedicated to defending human dignity, expanding human potential, and building a freer and safer world, panelists gathered to discuss the question surrounding the expansion or possible reduction of Fannie Mae and Freddie Mac’s activities.
The two-hour discussion consisted of panelists expressing concerns over declining creditworthiness of new homebuyers, with many of whom are spending more than 43 percent of their incomes servicing debts. Also on the docket was a debate concerning the future of the debt-to-income limit implemented by the Bureau of Consumer Financial Protection in 2014, from which the GSEs were exempt. Though certain participants hesitated to endorse a quick end to the GSE’s government conservatorship, the entire panel came to the agreement that 10 years after the GSEs entered conservatorship, implementing housing finance reform is still necessary.
The event description listed the GSE’s as being “under the total control of the Federal Housing Finance Agency” with no capital and a dependency on their de facto owner, the U.S. Treasury. The proposed discussion included topics such as the competitive power these organizations strip from private companies operating in this shared space, as well as the types of regulatory approvals that should be required before Fannie and Freddie “exploit these powers in new lines of business,” and if a future capital regime can address the market distortions Fannie and Freddie otherwise create.
The panel consisted of Ed DeMarco of the Housing Policy Council, Mike Fratantoni of the MBA, independent mortgage consultant Tom LaMalfa, Norbert Michel of the Heritage Foundation, Mike Stegman of the Milken Institute, and Edward J. Pinto of AEI, with moderator Alex Pollock of R Street Institute.
View the panel’s discussion below, or see the event presentation here [2].