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.
Housing can be a volatile sector, and housing is often found at the heart of financial crises.10 Our housing finance institutions were not—and are not—structured with that in mind. Extreme fluctuations in credit availability for housing hurt vulnerable households, reduce affordability and availability, and, as we have seen, can threaten financial stability.