Few recognize just how troubled this government agency really is. When measured against the accounting system used by private mortgage insurers, the FHA is deeply insolvent, with a capital shortfall of tens of billions of dollars. If it were a private firm, state regulators would immediately shut it down. 

When the bubble deflated in 2007, an unprecedented number of weak mortgages went into default - those that were held or guaranteed by Fannie and Freddie, and those that had been securitized by Wall Street. This drove down housing prices and threw Fannie and Freddie into insolvency. 

Here we go again.  A series of uncoordinated government policies are once more setting up the U.S. banking system for major losses and possibly another financial crisis.  

The Securities and Exchange Commission's lawsuits against six top executives of Fannie Mae and Freddie Mac, announced last week, are a seminal event.

It's always painful to take on the myths and ideological narratives of the left. The pundits of the liberal (excuse me, "progressive") media make a pretense of listening to reason, but when their views are challenged, they become abusive.

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.

President Obama in his State of the Union Address proposed that legislation be passed authorizing FHA to provide all homeowners that are current on their mortgage the opportunity to refinance at today's record low rates.

It is government's fault for offering a housing finance program without making an effort to maintain underwriting standards.