Feds Powell is speaking on housing reforms. His comments are not focused on the economy or monetary policy.
- Current housing finance system unsustainable.
- Govt backed mortgage securiites still pose systematic risk/potential tax payer losses
- Still no clarity of role Fannie, Freddie, other govt sponsored enterprises should play in housing finance
- Reforms applied to banks, requiring more private capital and allowing firms to fail, may be appropriate for housing
- System should change to encourage more competition, not the duopoly of Fannie and Freddie
- Reforms should be oriented toward making future bailouts as remote as possible
- Nevertheless sees credit flowing, default rates down and prices recovered to pre-crisis levels
- Some reforms made system safer. Fannie and Freddie portfolios are now 1/2 of pre-crisis size. About 50 bln in private capital backing some of the loans.