Federal Housing Administration head David Stevens said recently that no one trusts the housing finance system. As the Washington Post writes:
In a recent speech, David Stevens, the FHA’s commissioner, recalled meeting a group of international bankers who “peppered me with questions – very difficult questions” about what the U.S. government was doing to bring back their trust.
They all have been burned, he noted, after buying mortgage securities with triple-A ratings that turned out to be junk.
“We are at the point right now,” Stevens said, “where no one trusts the American housing finance system.”
Of course, the government couldn’t let housing prices adjust to a sustainable, non-bubble level. As US News and World Report points out:
Most economists feel the economy won’t rebound until housing prices bottom out and stabilize.
And Massey Knakal notes:
The value of mortgage backed securities and derivative products based on these securities cannot be accurately valued unless there is a high level of confidence in the value of our housing stock. A big concern about the implementation of the TARP is what the government will pay for these toxic securities. If we know what houses are worth, it will be easier to determine fair market value of the securities.
And couldn’t give “bailout” money to American consumers, so they could pop their heads above water.
But, no, the government couldn’t possibly do any of those things. Instead, it obviously has to pickpocket the people to try to artificially prop up housing, MBS and derivative prices.