Mark Calabria on Mortgages, Interest Rates, and Debt

Critics argue they serve mostly to make the financial system riskier and more statist. - Christian Britschgi 

• Fannie Mae and Freddie Mac distort the housing market, explains Mike Pence's former chief economist.

One such critic is Mark Calabria, the former head of the Federal Housing Finance Agency that has acted as conservator of the GSEs since 2008. In an interview with Reason's Christian Britschgi, he argues that Fannie and Freddie do little to expand homeownership.

What Fannie and Freddie provide is not a homeownership subsidy but a home debt subsidy. And we have seen this repeatedly, whether it's the mortgage introduction, whether it's mortgage credit subsidies—these things work through the demand channel, not the supply channel. To the extent that it is increasing the mortgage market, it's increasing mortgage demand, which if you're not doing anything about supply is only going to run up prices...