In Bloomberg View, Ed Glaeser lays out the problems with the Obama administration’s floated plan to stimulate the housing market through Fannie Mae and Freddie Mac by refinancing mortgages on a mass scale. Glaeser notes that such a program would be hugely expensive, and wouldn’t stimulate the economy or provide a way out of the foreclosure morass. It’s a bad idea.
Unfortunately, the only reason the Obama team is considering it in the first place is that it’s something they may be able to do on their own by administrative fiat, without having to deal with Republicans. Glaeser guesses that the program would cost $35 billion a year for dozens of years — far beyond the price tag of any stimulus measure the GOP could be persuaded to sign onto.
In other words, it seems as though Obama is getting a little desperate for options, and seriously considering some bad ideas as a result.