Survey: Greater GSE Subsidization Won’t Help Markets

Posted by Orb Staff on March 10, 2010 No Comments
Categories : From The Orb

Results from the National Association of Business Economics' (NABE) recent economic policy survey suggest that greater explicit subsidization of Fannie Mae and Freddie Mac would not provide long-term benefits to the mortgage market.

The semiannual survey, which polled 203 NABE members between Feb. 4 and 22, found that only 23% of respondents believe the long-term health of the mortgage market would be promoted by greater subsidization of the government-sponsored enterprises (GSEs).

Respondents were surveyed on a range of economic issues, including the financial regulation reforms being debated in Congress. Sixty-six percent of respondents do not believe the Obama administration-proposed Financial Crisis Responsibility fee will be positive for bank customers, and 49% said imposing size restrictions on financial institutions would not be effective in solving the too-big-to-fail dilemma.

When it came to the proposed consumer protection agency, responses were mixed: 54% said creation of such an agency would not impair safety and soundness regulation, while 25% said it would be detrimental. Forty-three percent of respondents said an agency would not impair access to credit, while 39% said it would.

Fannie Mae's chief economist, Douglas Duncan, and the Mortgage Bankers Association's vice president of single-family research and policy, Michael Fratantoni, were among the economics tapped to conduct survey analysis.

SOURCE: National Association of Business Economics

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