Larry Summers argues in an FT editorial that there won’t be any economic recovery without a housing recovery, and there won’t be a housing recovery without policy changes.
In short his policy suggestions are:
- GSEs should lower credit standards for homebuyers
- GSEs should take advantage of record-low rates
- GSEs should finance mass sales of foreclosed properties to those prepared to rent them out
- GSEs should be open to experimentation with principal reduction strategies on the local level
- FHFA should quickly resolve its dispute with the banks
- And two optional proposals: Bank regulators could change the way banks deal with second mortgages and underwater loans. The Federal Reserve could expand purchases of mortgage-backed securities