As I mentioned at the outset, housing finance reform has important implications for the Federal Reserve’s oversight of financial institutions, and for the U.S. economy and its financial stability. While I would not presume to judge these reform proposals, I will offer some principles for reform.
These principles are based on the lessons learned from the old system’s collapse, and from the experience of post-crisis bank reform. First, we ought to do whatever we can to make the possibility of future housing bailouts as remote as possible.