This is the eighth joint statement of the Shadow Financial Regulatory Committees of Asia, Australia-New Zealand, Europe, Japan, Latin America, and the United States.

For any housing finance reform plan to be credible, it must do much more than wind down the GSEs. Because of the Dodd-Frank Act a number of formidable legal obstacles now exist that must be cleared away before a private securitization market will come back. If the administration is serious, its plan must address all these issues.

In less than twenty-five years, government “affordable housing” and other housing policies have turned a healthy market into a financial ruin. Until Fannie and Freddie’s market dominance and the government’s role in the housing finance system are substantially reduced or eliminated, the United States will continue to have an inferior and unstable housing market.

As a result of the high loan limits and the suppression of private securitization through the obstacles and disincentives listed below, approximately 90% of all originations and 99% of all securitizations are now government guaranteed. This is an ongoing liability for the taxpayers and an unhealthy fiscal position for the United States.

America's financial crisis, deep recession and anemic recovery have largely been driven by economic policies that have deviated from proven fact-based principles.

Instead of trying to find ways that government can remain involved in housing finance, the new Congress should consider how to withdraw the government from any role in financing prime mortgages and implement various promising private-financing mechanisms--covered bonds, the Danish system, and a more focused and regulated securitization system.

There is an emerging consensus that the Fed should become a systemic risk regulator, but this is a bad idea, both because of the Fed's current mission and the nature of systemic risk.

Although thecredit default swapmarket can be improved, excessive restrictions on it would create considerably more risk than it would eliminate.