In this paper, I endeavor to show that continuing U.S. government involvement in the housing-finance system will inevitably involve serious losses for taxpayers and that the U.S. housing finance system could function well without GSEs or any other form of government financial support simply by ensuring that only good quality mortgages are allowed to enter the securitization system. 

Treasury Secretary Timothy Geithner has said that the administration wants to bring private capital back to the housing finance market. But without reopening Dodd-Frank and reigning in the Federal Housing Administrations (FHA), winding down government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac will not be enough to allow the private market to return

The fat years of the housing bubble lasted from 1999 to 2006 - seven years. The bubble was deflating by the beginning of 2007 and collapsed into the panics of 2007-09. Since then we have been struggling in its deflated wake. If we get the Biblical sum of seven lean years, the housing and related debt markets will bottom in 2013 - not a bad forecast. 

Efforts to blame the banks for the financial crisis are failing because they are not supported by data. The key fact is that, by 2008, before the crisis, half of the 54 million mortgages in the U.S. financial system were subprime and other low-quality mortgages.

Three years into the nationalization of housing finance by government-sponsored entities Fannie Mae, Freddie Mac and the Federal Housing Authority, it is time to start reducing their footprints. 

Conservatives and free-enterprise advocates should seize the moment to show their own passion for the issues being debated—and, where appropriate, even embrace the protesters’ moral critique of America’s distorted and depressed system.

Our expert panel will debate what should be done about Fannie and Freddie and the financially huge, politically charged mortgage finance sector in general.

Debt of non-budget government agencies is not counted officially as "government debt," which is harmful to American Taxpayers.