Reason Foundation

Recent Research and Commentary

Restoring Trust in Mortgage-Backed Securities

How the Private Sector Can Return to Mortgage Finance

May 3, 2012

Marc Joffe, Anthony Randazzo

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.

Durbin Swipe Fee Watch V: Gas Retailers

April 23, 2012, 12:20pm

Victor Nava, Anthony Randazzo

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.

Sheila Bair on the Prowl, a Guide

April 16, 2012, 8:40am

Anthony Randazzo

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.

Bernanke Resolved to Favor Traders, Inflation, and Government Debt with Continued ZIRP

March 27, 2012, 1:59pm

Anthony Randazzo

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.

(Video) Fed Doing Harm... to Savers

February 3, 2012, 5:57pm

Anthony Randazzo

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.

Durbin Watch IV: Redbox Edition

December 4, 2011, 4:29pm

Anthony Randazzo

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.

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