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MATH Briefing Series: Incremental Steps for a Safer Housing Finance System

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On September 18 2015, the Center for Financial Markets and Policy at Georgetown’s McDonough School of Business, in partnership with the Milken Institute, hosted its third-quarter Capitol Hill briefing on “Incremental Steps for a Safer Housing Finance System.” The event was part of the center’s Markets and the Hill (MATH) Briefing Series. The briefing addressed the current context of the housing finance market, developments in regulatory agencies, and an overview of current legislative proposals for housing finance reform.   

Panelists included Ed DeMarco, senior fellow in residence at the Milken Institute and Center for Financial Markets and former acting director of the Federal Housing Finance Agency; Phillip Swagel, professor at the School of Public Policy of the University of Maryland and a senior fellow at the Milken Institute; and Nick Timiraos, national economics correspondent for the Wall Street Journal.

The panel affirmed that seven years after the housing finance system collapse, government conservatorships remain unreformed. According to Timiaros, Fannie Mae and Freddie Mac’s current combined outstanding guarantees, backed by taxpayers, are actually higher than when the conservatorships were established. While all involved in the debate agree that the government’s footprint in the housing finance market needs to shrink, debate abounds on a path forward.  As Congress deliberates long-term overhaul bills, bipartisan consensus has emerged on some of the basic constructs and incremental steps for addressing housing finance in the short term. Ed DeMarco outlined three of these major steps, including: expanding the volume and depth of credit risk transfer transactions, refocusing the common securitization platform so it applies to the whole market, and freezing the conforming loan limit to constrain the taxpayer footprint at the high end of the mortgage market.

The MATH Series provides an opportunity for senior congressional staffers to pose questions to experts from industry, government, and academia. For more information about the monthly series, visit the Center for Financial Markets and Policy website or follow @GUFinPolicy.