The alarm bells are now ringing for the Federal Housing Administration, with delinquencies increasing.  The immediate and pressing issue is the safety and soundness of FHA today and the risk it poses to the taxpayer.  

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...

Since the enactment of a regulatory regime for Fannie Mae and Freddie Mac, their regulator has had only the powers of a conservator. This ordinarily means that the regulator could take control of the two GSEs under certain circumstances, but couldn't--as a receiver could--marshal their assets, pay off their creditors,...

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.

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In just a few months, Jim Lockhart, the new director of the Office of Federal Housing Enterprise Oversight (OFHEO), has shown himself to be a nonpartisan administrator, a quick study, and a practical man. Since taking office, he...

The expansion of agency debt not only imposes risk and realized losses on taxpayers, it also increases the cost of Treasury's direct financing, by creating a huge pool of alternate government-backed securities to compete with Treasury securities, and thus increases the interest cost to taxpayers.

The future of Fannie Mae and Freddie Mac is becoming cloudier. Legislation in Congress and a clear lack of support at the Treasury are harbingers of political difficulties ahead. Perhaps more important is the fact that these two government-sponsored enterprises (GSEs) are growing faster than the housing market. By...

Dodd-Frank overall is a poorly drafted statute that drastically expands the power of the federal government, creates new bureaucracies staffed with thousands, and does little to help the struggling American citizen.