Is the FHA the Next Housing Bailout?
Video
About This Event

Post-Event Summary
In front of a standing-room-only audience on Capitol Hill on Friday, Joseph Gyourko of the Wharton School of Business at the University of Pennsylvania presented his recent groundbreaking paper arguing that the Federal Housing Administration (FHA) is in need of a $50-100 billion taxpayer bailout. Gyourko's research found that the FHA is woefully undercapitalized, thanks to enormous and extremely risky growth during the housing crisis. And recent improvement in borrowers' credit scores doesn't brighten this dim picture. AEI's Edward J. Pinto discussed the FHA's long-standing role in promoting highly leveraged lending and warned that federal housing policies continue to dangerously distort the housing market.

---Matt McKillip

Event Description
Leveraged bets as high as 30 to 1 on risky investments with little equity cushion against potential losses are what helped bring down the likes of Lehman Brothers, Bear Stearns, Fannie Mae and Freddie Mac. Think it can't happen again? It's about to--with the Federal Housing Administration (FHA), says Wharton professor Joseph Gyourko. Gyourko's latest research on the FHA finds that it will need a $50-100 billion bailout to meet its minimum capital guideline, and it could be much worse if house prices fall further or unemployment increases. At this event, Gyourko will discuss the implications of his findings, and Edward Pinto, AEI scholar and housing finance expert, will respond. Breakfast will be served.

Agenda

9:30 AM
Presenter:
JOSEPH GYOURKO, Wharton School, University of Pennsylvania

Respondent:
EDWARD PINTO, AEI

10:30 AM
Adjournment

Event Contact Information

For more information, please contact Matthew McKillip at matthew.mckillip@aei.org, 202.862.7197.

Media Contact Information

For media inquiries, please contact Véronique Rodman at vrodman@aei.org, 202.862.4871.

Joseph Gyourko is the Martin Bucksbaum Professor of Real Estate, Finance and Business and Public Policy at the Wharton School of the University of Pennsylvania. He also serves as director of the Zell/Lurie Real Estate Center at Wharton and chair of the Real Estate Department. His research interests include real estate finance and investments, urban economics and housing markets. Mr. Gyourko is a research associate of the National Bureau of Economic Research (NBER) and co-director of the NBER Project on Housing Markets and the Financial Crisis. A former editor of Real Estate Economics, he serves on various journal editorial boards. Mr. Gyourko is a past trustee of the Urban Land Institute and currently is on the board of directors of the Pension Real Estate Association, and he also consults for and advises various real estate companies and investors.

Edward Pinto is a resident fellow at AEI. He has provided credit and marketing consulting services to the mortgage-finance industry for the last 20 years. Mr. Pinto was the executive vice president and chief credit officer at Fannie Mae from 1987 to 1989 and the senior vice president of marketing and product management from 1985 to 1987. Before his work at Fannie Mae, Mr. Pinto was senior legal counsel for the Mortgage Guaranty Insurance Corporation and general counsel for the Michigan State Housing Development Authority. Mr. Pinto’s consulting clients have included GE Capital Mortgage Insurance Company, Dime Savings Bank, Mellon Bank and Home Savings Bank. Mr. Pinto worked with the Loan Performance Corporation to develop their delinquency database, which is now the industry standard. He has appeared as an expert witness in real estate finance–related litigation and has published or contributed to articles in various publications and on the op-ed page of The Wall Street Journal. Mr. Pinto is frequently interviewed by newspapers and other news sources on real estate finance.

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

image The Census Bureau and Obamacare: Dumb decision? Yes. Conspiracy? No.
image A 'three-state solution' for Middle East peace
image Give the CBO long-range tools
image The coming collapse of India's communists
AEI Participants

 

Joseph
Gyourko

  • Joseph Gyourko is the Martin Bucksbaum Professor of Real Estate, Finance and Business & Public Policy at The Wharton School of the University of Pennsylvania.  He also serves as Director of the Zell/Lurie Real Estate Center at Wharton and is Chair of the Real Estate Department.  Professor Gyourko received his B.A. from Duke University and a Ph.D. in economics from the University of Chicago.  His research interests include real estate finance and investments, urban economics, and housing markets.  Professor Gyourko is a Research Associate of the National Bureau of Economic Research (NBER) and is Co-Director of the NBER Project on Housing Markets and the Financial Crisis.  A former editor of Real Estate Economics, Professor Gyourko presently serves on various journal editorial boards.  Professor Gyourko is a past Trustee of the Urban Land Institute (ULI) and currently serves on the Board of Directors of the Pension Real Estate Association (PREA).  Finally, he consults and advises real estate various companies and investors.


     

  • Email: gyourko@wharton.upenn.edu
  • Assistant Info

    Name: Neil McCray
    Phone: 2028625826
    Email: neil.mccray@aei.org

 

Edward J.
Pinto
  • American Enterprise Institute (AEI) resident fellow Edward J. Pinto is the codirector of AEI’s International Center on Housing Risk. He is currently researching policy options for rebuilding the US housing finance sector and specializes in the effect of government housing policies on mortgages, foreclosures, and on the availability of affordable housing for working-class families. Pinto writes AEI’s monthly Housing Risk Watch, which has replaced AEI’s FHA Watch. Along with AEI resident scholar Stephen Oliner, Pinto is the creator and developer of the AEI Pinto-Oliner Mortgage Risk, Collateral Risk, and Capital Adequacy Indexes.


    An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Pinto has done groundbreaking research on the role of federal housing policy in the 2008 mortgage and financial crisis. Pinto’s work on the Government Mortgage Complex includes seminal research papers submitted to the Financial Crisis Inquiry Commission: “Government Housing Policies in the Lead-up to the Financial Crisis” and “Triggers of the Financial Crisis.” In December 2012, he completed a study of 2.4 million Federal Housing Administration (FHA)–insured loans and found that FHA policies have resulted in a high proportion of working-class families losing their homes.

    Pinto has a J.D. from Indiana University Maurer School of Law and a B.A. from the University of Illinois at Urbana-Champaign.

  • Phone: 240-423-2848
    Email: edward.pinto@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: 202-419-5212
    Email: emily.rapp@aei.org
AEI on Facebook