Media Buzz: That Time American Exceptionalism Isn’t So Exceptional
June 13, 2013
Contrary to the Fannie & Freddie defenders’ assertions that America’s unique GSE-model of housing finance is the “envy of the world,” yesterday’s full committee hearing found that the U.S. ranks only 17th in the world in terms of the rate of homeownership. Our 65% homeownership rate puts us behind Australia, Ireland, Spain, and the United Kingdom, all of which provide far less government support for home ownership than does the United States.
Here’s what they’re saying:
POLITICO: Fannie Mae, Freddie Mac move up on Congress’s to-do list
House Financial Services Committee Republicans have spent the past five years battering the administration for failing to produce a formal proposal without presenting one of their own. But under Chairman Jeb Hensarling (R-Texas), the committee is making progress on its own plans and is expected to introduce legislation that aims to reduce the government’s role in the housing market and scales down the FHA, which insures loans for lower-income and first-time home buyers.
HousingWire: Academics push for return to GSE-free mortgage finance
The majority of academics pointed out that while there is no ideal housing finance system, most developed countries have proven that private capital can fund the vast majority of demand for housing finance, as it did in this nation before the credit crisis. The comments should come as no surprise. Chair Jeb Hensarling (R-TX) is a noted conservative known for pushing limits on government involvement in the nation's financial actives.
Mortgage News Daily: Housing Finance Should Take Cues From Other Countries
According to Jeb Hensarling (R-TX), committee chairman, "The hearing will examine the mortgage finance systems of other countries to determine whether a sustainable system of housing finance is possible that does not rely on government-sponsored enterprises or government subsidies."
Fiscal Times: Are Fixed-Rate Government-Backed Mortgages Over?
In his opening statement, committee chairman Jeb Hensarling (R-TX) claimed that Fannie and Freddie had not “propelled” the county to home ownership “nirvana,” saying that the guarantees had increased home prices and pushed millions of Americans into loans that were bound for foreclosure. Fixed rate mortgages are a “gold standard” for some, but a “rusty tin standard” for others, he said.
“The U.S. is practically alone in the modern industrialized world in having GSEs,” Hensarling said.
It’s the rare example of a Republican claiming the United States should be more like Europe. A higher share of people in Singapore, Italy, the United Kingdom and Canada own homes than in the United States, where the rate is 65 percent, according to the Census Bureau.
Hensarling has made no secret of his desire to end the guarantee. At an April hearing, Hensarling said his first goal is to “gradually reduce and eventually eliminate the government guarantee of Fannie and Freddie.”
According to committee staff, “much work remains” on finalizing “sustainable” reforms for housing finance legislation that would eventually come out of the House.
Credit Union Times: Committee Considers Overseas Secondary Mortgage Market Solutions
The hearing was the 1oth so far this year for the full committee or subcommittees that have explored housing policy reform, Chairman Jeb Hensarling (R-Texas) said in his opening remarks.
"Notwithstanding the damage they have caused in their checkered past, many cannot conceive of a housing finance market without a government-guaranteed Fannie and Freddie,” Hensarling said.
He said that while the U.S. is practically alone in the modern industrialized world in having GSEs directly guarantee mortgage securities and the level of government subsidy and intervention in the housing market, the U.S. leads the world in foreclosure rates. “In other words, only in America can you find a government that subsidizes housing more, so that we the people can get less,” he said.
Hensarling has been publicly vocal with his desire to privatize at least part of the secondary mortgage market. In April, he said the first step to a sustainable housing policy would be the elimination of Fannie and Freddie government guarantees. Wednesday, he urged his fellow lawmakers to consider alternative models for GSEs.
“We shouldn’t preserve Fannie and Freddie’s federal guarantee just because we have done so in the past. We shouldn’t preserve the federal guarantee just because those who believe they profit from the status quo urge us to continue doing so,” he said.
Perhaps America’s exception to the norm in housing finance isn’t so exceptional.