Opinion: Rep. Campbell: Keep Government in Housing

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Campbell ... the House Republicans gotten behind a plan who was shot down and Fannie Mae and Freddie Mac the toxic mortgage giants that were at the center of the two thousand a meltdown ... you come out with a variation which is to get rid of them but pray these new government backed the Guaranty associations of ... of this idea is probably not the thrill of a lot of our readers but what's the argument why this of these Housing monsters backed by the government that were really the part of the meltdown should be and ... they should be and and and they really Fannie and Freddie should go way and there is not really a whole lot of debate about that on Capitol Hill ... aam would amongst Republicans or Democrats the debate is about what to replace them ... with the replace them with nothing simply wind them down ... and I am them believe if you replace them with nothing and simply wind them down ... that you lose the thirty year fixed rate mortgage ... and that that is going to ... cause a precipitous and rather rapid ... drop in housing prices which will be very very bad for the economy generally ... on the other end of the spectrum are those who believe you should replace Fannie Freddie with a fully government ... entity that is explicitly a part of the federal government would guarantee ... the system that I propose ... without getting in all the weeds and that ... is that there would be a government guarantee ... not many entities ... not like Fannie and Freddie entity but of the securities ... but that that guarantee would be limited to eighty percent of the loan to value ... them the mechanism by which over time that eighty percent could be dropped ... and that the people who purchase that guarantee and will be optional nobody has purchased a guarantee ... of would pay a market rate for that guarantee rather than the obviously ... prior to that no much much much lower market rate ... that Fannie and Freddie pay for that for the implicit guarantee backed that up to our current bunch questions but one of them if the ... idea for your concern is due to local government back to quickly because you think it might to ... time because the housing market to sink a percent but this rally ... aam is an important start to reform and we saw all the problems with the the the chaos that resulted from covering banking housing ... isn't this a good time to start when we have ... although I would recommend it but I keep reading lots of money isn't this a moment where you can start to remove some of the other supports from the housing market well yes and we're starting which is not doing it only once ... when you think about it today ninety seven percent of all loans are either FHA Fannie Freddie or veterans ... banks ... and most of those are from dollar one I mean whatever the downy is ... absent the down five percent there from you know right ... from their ... units and these are ... explicitly ... parts of the government entities under under ... receivership but ... I'd better doing this ... in this proposal we drop that one dollar one The dollar twenty which is the dollar's zero ... but it's moving in the right direction ... and we set up a mechanism ... through which ... the private sector when it is ready ... can can absorb more of this brisk and ... and that's what we think is is a better on glide path ... um to a ... Tui fully private market then then ... then some of the other proposals which which in my ... view and they are too abrupt but as I am so you could support a plan that does gradually lower the conforming loan limits covered by Fannie Freddie FHA ... so that we yet we gradually shrunk the government footprint on the move that's another way to do it ... as long as that is done relative to the price I come from a high cost area Orange County California ... and and so as long as it's on a national number like we ... can use now ... but that it is a percentage of the average price of a home in the area ... so you don't wind up having ... you know it ... of all the houses ... in California ... not ... not able to access from any potential coming into that every house in Mississippi able to do it ... and as long as it some of her didn't you bring the limits that never were like Oh series can Outlook austere us come down but I but ... but but the point is I have improved the experiment ... don't we want to get the the government out of the this market as soon as possible and ... then and ultimately to it I mean it when you use to be concerned there will be a market if the government holds back but isn't ... the fact that the government seized ninety plus percent of this market ... a big reason why there really to be a private well but know if you look in the jumbo market which is more than three percent is ... aam in nobody's making a twenty percent down thirty year loan ... which which is that traditional loan off on a little while but that's not an American right you feeling though the government should guarantee that no no no what what I'm saying though is that we built ... for seventy five years as we build housing on in this country ... so if you remove that housing prices will fall ... and they will fall a lot and that's ... that's going to result in it such a big part in not just the kind of ... people's psyche ... that that's can result in a in a recession on and you've got all the things are great ... this is one you feel we don't have concrete we can ease their way into this thing ... on it into ... a reduction of of government ... are ... involved in the housing why we don't need to do it all was okay ... let's question you obviously live in an area where a real estate is maybe a ... more significant than the older places lot of high priced homes there ... aam ... and that you seem to have the view that ... housing is a IIa driver of the economy as opposed to what we would see him as a symptom of the of the hybrid economy that say otherwise pretty well with through productivity gains new technology Insider ... D are you concerned that you might be over reading ... the value of housing in the economy ... I'm not but I admit I'm not an economist but ... in my lifetime ... every ... recession ... housing and cars to huge purchases two big parts the county debate and that ... two huge elements of people's psyche I watched when I was selling cars but I have read and talk about that twenty five years ... Carson retell car business ... when the price of people's houses went down the their perception of their net worth ... of ... of value of all kinds of things dropped and they stop buying lotsa lotsa things ... when they're housing price went up ... they felt better about it ... so if housing prices were to drop again and we saw we into thousandeight ... that you took them down again from where they are now because ... financing was not available in them in that ... the traditional customary ... the format people and then use to ... um ... the EU will put the brakes not just on housing Mitchell put the brakes ... on automobiles on a whole lot of other things in the economy ... ok get less work things ... thanks very much ...