The FHA Has Played a Positive Role in the Housing Market, but Let's Not Overdo It

My friend and co-author Jared Bernstein used his NYT blogpost to defend the Federal Housing Authority (FHA). I am mostly sympathetic to his case. The FHA has played a positive role in the recovery, helping to support the housing market when private funding had largely disappeared. However, I was struck by his reference to a study by Moody's Analytics which purportedly finds that house prices would have fallen by another 25 percent had the FHA not been there to support the market.

I didn't act...