Fannie And Freddie Can Provide Unilateral Stimulus

Many pundits are stuck on magical thinking about economic recovery in which better speechmaking could produce results. Others have become too defeatist, arguing that “any proposal to address the economy would require passage by the House and Senate.”

As I wrote yesterday, there are at least a few unilateral measures the president can take. Notably, I suggested using Fannie Mae and Freddie Mac to deliver stimulus via mortgage modifications. The White House hasn’t embraced that idea, but today it does seem to be considering a different one, namely it wants “to seek investors’ ideas for turning thousands of foreclosed properties owned by government-backed entities into rental homes, according to administration officials.” As Jared Bernstein lays out, this is a pretty excellent idea that’s certainly worth a try. There’s a chance investors won’t be interested or it will go awry through some other path, but it ought to provide some kind of useful boost.

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Another somewhat related tool is that the administration doesn’t have to be pursuing deportation of undocumented immigrants so aggressively. When you lock people up and ship them to a foreign country, this reduces the demand for housing (among other goods and services) and contributes to our woes.