Guarantees that Deliver the Equality Goods

By Basil N. Petrou and Karen Shaw Petrou

At a recent meeting with senior White House and Congressional budget experts, we revisited the benefits of using federal guarantees to drive private capital to public need.  Much of the discussion centered on taxpayer protection, a significant challenge due to risk-taking incentives baked into the federal budgeting process.  There are many reasons – billions of them in fact – to reject the budgeting approach mandated by the Federal Credit Reform Act (FCRA) in favor of a fair-value methodology.  Less known and not discussed is an issue of equal importance:  getting guarantees right not just for taxpayers, but also for the regulated financial companies from which the private capital for successful guarantees must come.  Here, we lay out principles for equality-enhancing guarantees that meet needs ranging from sound mortgage lending to translational biomedical research. Continue reading “Guarantees that Deliver the Equality Goods”

Home Ownership, Wealth Accumulation, and the FHA

By Karen Shaw Petrou and Basil N. Petrou

Last Thursday, the Senate Banking Committee considered the confirmation of Brian Montgomery to be the Trump Administration’s Federal Housing Administration (FHA) Commissioner, allowing him to step back in to the shoes he filled in the George W. Bush Administration.  But, times are different now – as we’ve noted before, the U.S. is far less economically equal than it was even in 2007 and the residential-mortgage market largely serves only the most creditworthy, wealthiest households.
Continue reading “Home Ownership, Wealth Accumulation, and the FHA”