Government subsidies for affordable housing should be disentangled from the broader discussion of housing finance, according to St. Louis Fed President Jim Bullard. At a conference this week, Bullard said affordable-housing subsidies should be regularly reviewed and subject to congressional approval.
The recommendation is one of several guiding principals that Bullard says should steer the housing-finance reform process. The conference, hosted by the St. Louis Fed, looks at the past, present and future of government-sponsored enterprises.
Bullard is also pushing for less government involvement and greater private-sector involvement in the mortgage market. A well-functioning private system protects taxpayers from insolvency risk, he said.
‘The extent of Congressional meddling in this market has been astonishing to the point where one can barely identify what the private sector outcomes would be in the absence of intervention,’ Bullard said. ‘To the extent possible, we need to let the private sector provide the bulk of U.S. housing finance going forward, without the incentive-distorting set of government programs and taxpayer guarantees that caused our current system to collapse.’
Bullard's comments can be viewed in their entirety here.
SOURCE: St. Louis Fed