The Treasury has produced its long-awaited (and late) report on reforming the housing market. Felix Salmon summarizes it:
The message is clear: what we have right now is unacceptable, and we need to do something big; the main choice facing Congress is between a modest government housing guarantee, a tiny one, or none at all.
Arnold Kling (who used to work for Freddie Mac IIRC) is more critical:
With so little detail spelled out, all we are left with is a proposal for the government to take unknown risks in an unknown way with unknown consequences. I assume that more information will be forthcoming.
He also puts in a pitch for Canadian-style 5 year rollover mortgages. Those make all the economic sense in the world but I’m skeptical that they will find a great deal of favor here either with consumers or bankers.
My guess is that this report will be all be DOA and that Congress will do a lot of huffing and puffing and give birth to a mouse. You?
Well, perhaps my cynicism is overblown, but I really expect of the “privatize but not really” cycle with Freddie and Fannie. And no change to mortgage interest tax deduction.