Beyond strengthening GSE regulation, the Congress will need to clarify the circumstances under which a GSE can become insolvent and, in particular, the resultant position - both during and after insolvency - of the investors that hold GSE debt, as well as other creditors and shareholders. This process must be unambiguous before it is needed.
To be sure, marked increases in available global capacity and the deregulation of key industries have removed bottlenecks and increased the competitive supply response of many economies, especially ours, and these developments have been influential in suppressing price increases. It would be an exaggeration to imply that, whenever a potential cost increase emerges on the horizon, a capital investment is available to quell it.