Don’t Be Fooled: Johnson-Crapo Bill Isn’t Significant Housing Reform

Norbert Michel / John Ligon /


In an effort to reform the nation’s housing finance system, Senate Banking Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) will hold a markup for their bill Tuesday at 10 a.m.

Given that close to 100 percent of the U.S. mortgage market is now backed by the federal government, it is good that Congress is tackling reform. Unfortunately, the approach being taken in the Johnson–Crapo bill would ensure that U.S. mortgage markets are slightly remodeled rather than completely reformed.

Unless the Senate completely reverses course, the government will remain at least as involved in these markets as it was prior to the 2008 crash.

>>> FACT: Fannie and Freddie have received billions in subsidies, but the homeownership rate is only 1 percentage point higher than it was in 1968. Learn more.

The U.S. does more to promote home mortgages than most countries, but we’ve barely increased ownership. Moreover, total costs of owning a home have increased.

Today, the U.S. Treasury is keeping Fannie and Freddie off the books—and hiding billions in taxpayer guarantees in the process. The bill sponsored by Johnson and Crapo would ultimately leave many of these problems intact.

Other lawmakers—such as Reps. Jeb Hensarling (R-Texas) and Justin Amash (R-Mich.)—are intent on getting government out of the mortgage-backing business.

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