When Housing Policy Becomes Monetary Policy

Jerome Famularo

Last week, President Trump instructed his “representatives” to purchase roughly $200 billion in agency mortgage-backed securities (MBS). It appears to be an attempt to lower mortgage rates without relying on a Federal Reserve that is not easing (lowering interest rates) as aggressively as the administration would like.

Sidestepping the Fed, the plan relies on Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) still operating under federal conservatorship, to do the heavy lifting.