The Role of Government Affordable Housing Policy in Creating the Global Financial Crisis of 2008
Levin Center Identifier
Policy Agendas Project Major Code
Policy Agendas Project Minor Code
Additional, Minority, Dissenting Views
Found Using Methodology
Brief Executive Summary
The Committee on Oversight and Reform investigated the housing bubble and its subsequent financial crisis of 2007 which was attributed in part to federal government intervention in the housing market, particularly through entities like Fannie Mae and Freddie Mac. This intervention privatized profits but socialized risks, leading to reckless behavior and exposing taxpayers to significant losses. Policies promoting "affordable" lending encouraged risky practices, ultimately resulting in devastation for the economy. Despite initial success in raising homeownership rates, government intervention created a mortgage crisis with far-reaching consequences, highlighting the dangers of manipulating market outcomes through government initiatives.