Old consensus: we need Freddie and Fannie in order to make housing "affordable."
New consensus: we need them in order to "prevent further house price delclines," in other words, to make housing less affordable.
It's the Goldilocks theory of home mortgage intervention. Most of all, I am curious what is the underlying theory why few private investors would not, without the mortgage agencies, fund mortgages at the right price. I would gladly write a series of blog posts examining those theories, as many of those same investors buy riskier assets, such as some equities. Or is it simply an attempt to hold a finger in the dike?
Our either real or supposed inability to do away with the mortgage agencies over a five-year time horizon is one of the major reasons to be a pessimist about the American economy today. None of the underlying theories about these agencies, and why they are needed, are very good news for any of us. And that is perhaps why those theories are not articulated very often.