Richard Green Testifies Before Senate Banking Committee
Green Testifies Before Senate Banking Committee
From SPPD staff reports
USC School of Policy, Planning, and Development professor Richard Green testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on Sept. 13 about the future of government enterprises Fannie Mae and Freddie Mac.
Green, who is director and chair of the USC Lusk Center for Real Estate, was among four expert panelists. The panel was split on whether a government guarantee should exist, with Green on the side saying that they should.
In the testimony, Green divided his remarks into four key areas:
- “I will argue that the United States has had a history of providing guarantees, either implicit or explicit, regardless of its professed position on the matter. This phenomenon goes back to the origins of the republic. It is in the best interest of the country to acknowledge the existence of such guarantees, and to price them appropriately before, rather than after, they become necessary.
- I will argue that in times of economic stress, such as now, the absence of government guarantees would lead to an absence of mortgages.
- I will argue that a purely “private” market would likely not provide a 30 year fixed rate pre-payable mortgage. I think this is no longer a particularly controversial statement; what is more controversial is whether such a mortgage is necessary—I will argue that it is.
- I will argue that in the absence of a federal guarantee, the price and quantity of mortgages will vary across geography. In particular, rural areas will have less access to mortgage credit that urban areas, central cities will have less access than suburbs. Condominiums already are treated less favorably than detached houses, and this difference is likely to get larger in the absence of a guarantee.”
The other panelists were: Peter Wallison, Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute; Dwight Jaffe, Willis Booth Professor of Banking, Finance, and Real Estate at UC Berkeley; and Adam Levitin, professor of law at the Georgetown University Law Center.