Moving Beyond Fannie and Freddie

The Wall Street Journal reports:

Last October the GSEs' regulator, the Federal Housing Finance Agency, estimated that the final cost for bailing them out would be between $221 billion and $363 billion.

Taxpayers might wonder what they got for all these costs. Certainly not a superior home-ownership rate—the U.S. ranks 17 among developed countries—well behind Chile, Italy and Israel, for example. Certainly not stable prices.

As other countries have shown, a housing system exposed to normal financial-market fluctuations is fully capable of meeting a nation's needs. Covered bonds, in which a bank sets aside a portfolio of mortgages to back up its obligations to bond buyers, are used widely in Europe and are generally treated as a high-quality security in the financial markets.

An article well worth your time.