Obama Announces Housing Market Reforms, But for Some He Missed the Mark
"In a speech on Tuesday, President Obama signaled that Washington may finally be returning to the place where the financial crisis started," writes Binyamin Appelbaum. "With the housing market on the mend, Mr. Obama said it was time to 'wind down' Fannie Mae and Freddie Mac."
Though the long-sought market reforms Obama outlined echo those that have bipartisan support in the Senate, observers such as Josh Barro bemoan the mixed messages delivered by the President in his speech. Writing in Business Insider, Barro critiques Obama's "two discordant notes on" on the need to invest in affordable rental housing on the one hand, while mythologizing homeownership on the other.
"Americans want to be middle class, and if we keep telling them that homeownership is the 'most tangible cornerstone' of middle classness, and the best available evidence of whether you've worked hard and been responsible, they're going to keep wanting to buy houses," says Barro. "Why not instead emphasize that renting—that is, not taking all the money you have in the world and putting it into a highly leveraged real estate investment—is a perfectly valid life choice, even for people leading prosperous, middle-class lives?"
Finding a middle ground between those pushing to reduce the government's decades-long subsidization of homeownership and those looking to ease access to mortgages may be as hard as trying to reconcile Obama's oratory discordance, however.
"For all the talk," notes Appelbaum, "it will be difficult to alter the government’s role in housing finance, which has remained substantially unchanged for half a century — notwithstanding Fannie and Freddie’s move from informal to formal wards of the state. That is because Americans like cheap mortgage loans and it is hard to preserve the benefits without the costs of the current system."