News of a bipartisan effort underway in the U.S. Senate to reform the housing finance industry is a welcome development, but the devil is in the details.
Almost a decade after the financial crisis, in addition to repairing damage caused by the flawed Dodd-Frank law, policymakers must work swiftly to wind-down Fannie Mae and Freddie Mac, the two institutions at the heart of the last financial crisis.
Failing to reform the housing market is Dodd-Frank’s biggest omission. Doing so now is essential to preventing future taxpayer bailouts and protecting the hard-earned savings and investments of American families.
Key to reforming these government-sponsored entities (GSEs) is deconstructing the Obama-era financial crisis narrative: that the Great Recession was due principally to insufficient bank regulation and dodgy Wall Street behavior.
To do so, policymakers should turn to Peter J. Wallison’s 2014 book, Hidden in Plain Sight. Wallison makes a compelling, thoroughly-documented case that government housing policies were “the sine qua non of the crisis – the element without which there would not have been a widespread financial breakdown in 2008.”
Read the full op/ed on cnbc.com, including my suggestion on a roadmap to consider for GSE reform.