Is the Federal Housing Administration the Next Bailout?

Policy Forum
December 13, 2012 12:00PM
Hayek Auditorium
Featuring Mark Calabria, Director, Financial Regulation Studies, Cato Institute; Edward Pinto, Resident Fellow, American Enterprise Institute, Former Chief Credit Officer, Fannie Mae; and Michael Fratantoni, Vice President, Research and Economics, Mortgage Bankers Association of America; moderated by Alan Zibel, Reporter, Wall Street Journal.

While Fannie Mae, Freddie Mac, and private lenders have deservedly garnered the bulk of attention and blame for the mortgage crisis, other federal programs also distort our mortgage market and put taxpayers at risk. The most prominent of these agencies is the Federal Housing Administration (FHA). The FHA currently backs an activity portfolio of over $1 trillion. Relatively small changes in the performance of the FHA’s portfolio could result in significant losses. As the taxpayer is, by law, obligated for any losses under FHA, these are not losses that can be avoided. Reasonably foreseeable changes to FHA’s performance could easily cost the taxpayer tens of billions of dollars, surpassing the ultimate cost of the Troubled Asset Relief Program bank bailouts. The panel will examine the fiscal health of FHA and examine policy proposals for reducing both the likelihood and severity of a taxpayer rescue of FHA.