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How the Private Sector Can Return to Mortgage FinanceMay 3, 2012
The mortgage finance market has leaned heavily on government support over the past few years. More than 90 percent of mortgages originated in 2011 were securitized by government entities using taxpayer funds to guarantee investors against default risk. This support cannot continue forever. The status quo perpetuates many of the policies that contributed to the housing bubble and consequently promotes an unstable mortgage market. In order to avoid another crisis, and to reduce the $5.8 trillion in liabilities for taxpayers, the government must exit mortgage finance and private capital must shoulder mortgage default risk. There are several roadblocks facing this transition, including subsidies for government-sponsored enterprises, Dodd-Frank regulations, legal complexities for mortgage-backed securities, and a profound lack of confidence in the models used by credit rating agencies to assess mortgage investments. This policy study examines the nature of these roadblocks and proposed solutions to ease the path of the private sector taking back housing credit risk from taxpayers.
It is time for another edition of the Durbin Swipe Fee Watch. This time we look at a $1 billion subsidy for gas retailers that the Durbin Amendment has created. Consumers are still getting the shaft with this regulation.
The idea former FDIC Chairwoman Sheila Bair proposes in her Washington Post op-ed is completely crazy, but that is the point. She is just articulating what Fed policy is for the financial system, suggesting it for the population as a whole, and showing it to be crazy on both fronts. Here is a guide to understanding the Bair tongue-anchored-to-cheek op-ed.
Fed Chairman Bernanke told the National Association for Business Economics conference this week that the labor market was still in “deep” trouble and so we should expect ZIRP (zero interest rate policy) to continue for the next several years. Putting the politics aside, what Bernanke is essentially saying is that he prefers the trade off of propping up stock prices versus encouraging savings.
Last night on Freedom Watch I questioned Fed Chairman Bernanke's ability to be self reflective after he suggested to Congress that they take care to "do no harm." While that is great advise and all, right now the Fed is actually causing harm, primarily to savers with its never ending zero interest rate policy.
Many of you are likely familiar with Redbox and their 28,000 locations nationwide. For the past few years Redbox has slowly eaten into the customer base of groups like Netflix and helped to put the nail in the coffin for Blockbuster. Why wander through shelves looking for a movie or wait for a film to arrive in the mail when you can just head down to a Redbox at a neighborhood grocery or convenience store, flip through a computer screen, and get the movie you want now? And for just a buck each! Well, until now.
View Resources by Type
- Durbin Swipe Fee Watch V: Gas Retailers
Victor Nava and Anthony Randazzo
April 23, 2012, 12:20pm
- Sheila Bair on the Prowl, a Guide
April 16, 2012, 8:40am
- Bernanke Resolved to Favor Traders, Inflation, and Government Debt with Continued ZIRP
March 27, 2012, 1:59pm
- (Video) Fed Doing Harm... to Savers
February 3, 2012, 5:57pm
- Durbin Watch IV: Redbox Edition
December 4, 2011, 4:29pm
- Long-term Consumer Outlook
September 30, 2011, 12:08pm
- Shopping Our Way to Recovery
September 16, 2011, 4:04pm
- Stimulus Redux: Breaking Down the American Jobs Act
September 16, 2011, 2:18pm
- Nonfarm Productivity Revised Down
September 7, 2011, 7:29am
- Wells Fargo Customers Feel the Sting of So-Called Consumer Protection
August 22, 2011, 5:26pm
- The CFPB's Ironically Complicated Regulations
Carson Bruno and Anthony Randazzo
August 3, 2011, 4:00pm
- Richard Cordray as CFPB Director is No Better than Elizabeth Warren
July 18, 2011, 5:01pm
- Our Dodd-Frank Commentaries
March 15, 2011, 7:50pm
- Cramdowns Could Return
March 11, 2011, 4:28pm
November 9, 2010, 2:20pm
- What Could Go Wrong With QE2
November 6, 2010, 9:11am
- One Reason the Economy Sucks in Graphs
October 27, 2010, 6:12pm
- Here Come New Bank Fees
September 15, 2010, 12:10pm
- Business Start-Ups Creating Jobs
September 2, 2010, 8:35am
- More Limits on Credit Card Fees
January 5, 2010, 4:09pm
- Government to Set Credit Card Rates?
April 20, 2009, 9:00am
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