Matthew Yglesias » The Cost of Fannie and FreddieIf you look at the fiscal cost of TARP compared to the cost of the Fannie & Freddie takeover, it’s quite small. But the legislative measure authorizing the Fannie/Freddie nationalization, the Housing and Economic Recovery Act of 2008, was passed by a bipartisan congressional vote and signed by George W Bush with very little controversy back in July of 2008.
The government should not be subsidizing home ownership anyhow. The US has better housing than anywhere else on earth and more home ownership.
And the idea that middle class families should basically live inside their lifesavings seems perverse. The good idea at the heart of mortgage securitization is that it doesn’t make sense for a bank to make a geographically undiversified investment in housing. But of course that’s exactly what a household is doing when it buys its home.
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