As we noted yesterday, the raison d'etre of housing subsidizers Fannie Mae and Freddie Mac has changed radically in the past three years.
Specifically, the purpose of these two agencies has gone from "making housing affordable" to "keeping houses expensive."
The government is panicked about what will happen to the economy (and voters) if house prices decline further. By subsidizing mortgages through Fannie and Freddie, therefore, the government is now doing everything it can keep house prices as high as it can.
Never mind that house prices are still above their long-term average (see price-to-rent chart from Calculated Risk above--click for a larger version).
Never mind that most Americans did not buy houses during the bubble years, and that many of those who did have since sold or been foreclosed upon--so this subsidy is now hurting more Americans than it is helping.
Never mind that tens of millions of Americans would love to buy a house right now but can't because house prices are still too expensive--in part because they're being propped up by tax credits and mortgage subsidies.
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