Even though the house prices on which debt was built have disappeared, the debt is still with us as a debt overhang, or better, hangover.

We need better housing finance structures and ideas: The timing of the covered bond bill is certainly appropriate.

The Federal Home Loan Bank (FHLB) System is a government-sponsored enterprise consisting of twelve cooperatively owned institutions that are regulated by the Federal Housing Finance Board. Shares in the individual FHLBs are owned exclusively by banks, savings institutions, credit unions, and insurance companies. Like Fannie Mae and Freddie Mac, FHLB...

The SFRC urges the Federal Housing Finance Board to require thatFHLB accounting statements recategorize excess stock as a form of debt. Moreover, studying this issue has convinced the SFRC that a piecemeal approach to restructuring capital requirements for the FHLBs is inadequate. The entire structure of capital management across the FHLB system needs a thorough overhaul.

Is the Federal Housing Finance Board's newest regulation a wise one?

The House Financial Services Committee and Senate Banking Committee bills are generally consistent, although a few points of controversy must be addressed.

The domination of the secondary mortgage market, the largest in the world, byFannie Maeand Freddie Mac enables them to obtain substantial monopoly profits for the benefit of their stockholders and management.

This statement is also available here as an Adobe PDF.

Statement No. 251For Information Contact:Paul M. Horvitz713-780-3771Peter J. Wallison202-862-5864

The subprime mortgage crisis has brought to light several policy issues associated...