US Has Effectively Nationalized Home Mortgage Industry

The home mortgage sector in the world’s largest economy has been “effectively nationalized,” says George Melloan, former deputy editor of the editorial page for The Wall Street Journal.

Government agencies — primarily Fannie Mae and Freddie Mac, but also the Federal Housing Administration — insured or purchased more than 90 percent of home mortgages originated in 2012, a $1.3 trillion business, compared with 30 percent in 2006, according to ProPublica data.

Melloan, author of “The Great Money Binge: Spending Our Way to Socialism,” traced the situation back to the end of the last century, citing government and “powerful” lobbies.

“When President [Bill] Clinton forced the banks to begin their subprime mortgage binge in the 1990s, he called it ‘affordable housing’ for people with limited means, a politically appealing idea,” Melloan wrote in an opinion article for The Journal.

“But the real muscle came from well-heeled lobbies — the builders, real estate agents, bankers and construction-worker unions.”

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