Your editorial “A Conservative Court Awakening” (June 26) correctly states that a new Federal Housing Finance Agency (FHFA) director in the Biden administration “will again relax underwriting standards to boost home ownership. property”. But let’s say it more clearly: this manager will lower credit standards and increase risk again to promote temporary home ownership through low-credit loans. This will revive the famous “make and sell” model for such loans, so that lenders can pass the credit risk on to taxpayers. Systemic financial risk will increase.
When a regulator becomes a cheerleader, it’s always bad news. All the more so in this case as the director of the FHFA will remain the curator of Fannie Mae and Freddie Mac, with more power over his charges than a normal regulator. How lucky the Trump administration’s treasury failed to name Fannie and Freddie as the “systemically important financial institutions” that they are. Then they would be subject to additional risk oversight by the Federal Reserve, instead of just taking orders from a “housing czar” with a politicized loan program.
Alex J. Pollock
R Street Institute