The Future of the U.S. Housing Finance System: Bringing the U.S. Residential Mortgage Finance System into the 21st Century
March 29, 2015 5:00am by
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On the last slide last sentence we see one thing that Hank Paulson got right. For a private entity to be provide a solid mortgage guarantee it would have to be capitalized so well that it would have a very low rate of return. But the private sector does not tolerate a low rate of return, so any private entity would turn into butter in a severe downturn. However, since society cannot tolerate a total collapse of the housing sector (it would take down the economy), government would be forced to bail them out. So it comes down to whether “we the people” will bail out an entity owned by “we the people” or by the rich.
so what private enterprise will spend several hundred thousand dollars, and then wait to be repaid up to 30 years later?