The concentration of mortgages in government-backed agencies including Fannie Mae and Freddie Mac is putting taxpayers at risk, according to Federal Reserve Governor Jerome Powell.
CNBC reports that Powell said that the current housing finance system is “unsustainable.” Powell argues that political action is needed to change the landscape. While the Fed does not directly regulate mortgage finance, it still has an impact on the stability of the industry.
Some principles behind post-crisis banking reforms could be applied to mortgage finance, he said, to put more private capital at risk and ensure that no institution, including the government-sponsored enterprises, is too big to fail.
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