Housing, debt ceilings & zombie banks
In a Washington Post report this week, the Obama Administration was said to have decided to adopted a proposal to continue a major government presence in financing mortgages. The Treasury subsequently denied this report in a statement posted by Deputy Secretary Neal S. Wolin: “The Obama Administration believes that the private sector – subject to strong oversight and consumer protection – should be the dominant provider of mortgage credit. That’s why, in each of the three options we outlined in our report to Congress, the government’s footprint in the housing finance market will shrink substantially. That’s why, in each of the options, any government support for housing finance will be targeted and limited. This will help ensure that taxpayers are protected and the private sector bears the burden for losses.” Would that any of this were really true. Let’s go through this statement and pick out some of the more notable canards and omissions of fact. First and foremost is the idea that the private sector is willing to take a leading role in housing finance in the U.S.