Defining GSEs' Role in Affordable Housing

WASHINGTON, DC-During the testimony last week over FannieMae and Freddie Mac’s future, there was little notice paid to the role the GSEs played inaffordable housing–and whether or not the country could afford to continue that role. For the most part, testimony from Treasury Secretary Timothy Geithner and others made passing references to affordable housing and the need to keep what works with the GSEs–which presumably includes affordable housing support–intact.

Testimony by Anthony Sanders, a professor of real estate finance atGeorge Mason University, though, took another tact. He noted that thefederal debt already stands at $8 trillion and the Fannie Mae, Freddie Mac and Federal Home Loan Bank debt stands at $8 trillion as well. “This combined debt load for theUS is $16 trillion and represents 110% of our gross domesticproduct,” he said. “This ‘Grecian Formula’ of debt issuance to fundhousing goals is not sustainable. We simply have too much leverage inthe housing finance system.”