Wednesday, August 7, 2013

How do you subsidize risk taking without encouraging more risk taking?

That is the goal of President Obama's plan to reform the mortgage industry:
He wants a housing finance system that has the government backing to provide cheap mortgages and dedicated off-budget funding for low-income constituencies. But he does not want subsidies that encourage bad housing decisions and leave the taxpayer on the hook for losses. In short, he wants the upside of the traditional system without the downside.

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