The housing market is in straits, and many members of Congress are looking to Fannie Mae and Freddie Mac to step in and help. But the two government-sponsored enterprises (GSEs) have troubles of their own. Freddie Mac announced a substantial quarterly loss in late November, following Fannie’s somewhat smaller loss...

Reform focused on sustainable lending would have FHA target a projected average claim rate of 5 per 100 insured loans under normal circumstances and 10 per 100 insured loans under stress circumstances.  This rate is about five times the normal default level for prime loans and about half the FHA's traditional default level under normal circumstances.

A common regulator for housing GSEs would regulate three of the largest debt issuers in the world.

The author presentsten tongue-in-cheek recommendations onreforms forthe Democratic Party.

The story of Fannie Maeand Freddie Mac is a cautionary tale about the moral hazard created by government support for private institutions.

The legal authority and funding are already in place.

The government's takeover of Fannie Mae and Freddie Mac is similar to the savings-and-loan collapse of only twenty years ago.