Insight & Thought Leadership on the Global Economy

He really has the ability to put aside any pre-existing agenda and just talk facts to almost everybody — Barney Frank, U.S. Representative for Massachusetts’s 4th Congressional District

Testimony before the House Financial Services Committee

Mark Zandi addressed the House Committee on Financial Services on July 18th for a hearing entitled, “A Legislative Proposal to Protect American Taxpayers and Homeowners by Creating a Sustainable Housing System”.

Mark Zandi

An archive webcast is available here.

To view the full testimony of Mark Zandi click here.

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A Pragmatic Plan for Housing Finance Reform

Mark Zandi joins coauthors  Ellen Seidman, a senior fellow at the Urban Institute and former director of Treasury’s Office of Thrift Supervision; Phillip Swagel, a senior fellow at the Milken Institute and a former assistant treasury secretary for economic policy; and Sarah Rosen Wartell, president of the Urban Institute and a former deputy director of the White House’s National Economic Council to propose a pragmatic reform of the housing finance system.

“A Pragmatic Plan for Housing Finance Reform” addresses five goals: ensuring system stability and liquidity; ensuring access and equity for borrowers; strengthening affordable housing; limiting the government’s role and risk; and establishing private-sector incentives, competition, and innovation.

Click here to view the full report.

 

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Headwinds Fade, Tailwinds Develop

Dr. Mark M. Zandi discusses the factors that have weighed on the economic recovery, including the housing crash, deleveraging, fiscal drag, and the loss of confidence and heightened uncertainty at the Federal Reserve Bank of San Francisco. Each of these factors will soon become less weighty, suggesting the economic recovery should gain traction as we move to the middle of the decade. To view the transcript and presentation click here.

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U.S. Macro Outlook: Hanging Tough

  • U.S. employment has grown faster than expected given the restraint from federal fiscal policy.
  • Real GDP growth has slowed nevertheless, likely ending the second quarter below 2% annualized.
  • Improved consumers confidence shows in rebounding vehicle and house sales.
  • Markets are skeptical that the Fed can continue to hold long-term interest rates down.
  • Unrest in the developing world threatens a growing market for U.S. exports.
  • Threats to a stronger U.S. recovery, while substantial, are less severe than they were a year ago.

The U.S. economy appears to be moving forward gracefully despite raging fiscal headwinds. The tax increases and government spending cuts, which will lower GDP by an estimated 1.5 percentage points this year, have done less damage than expected. Employment in particular has outperformed expectations: If anything, job growth has picked up in recent months. Payrolls have recently been adding close to 200,000 positions per month, topping forecasts of less than 150,000 at the start of the year.

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Evaluating the Corker-Warner Bill

Housing finance reform received an important boost last month with the introduction in Congress of the Housing Finance Reform and Taxpayer Protection Act of 2013.1 The bipartisan legislation, written by Senators Bob Corker (R-TN) and Mark Warner (D-VA), represents a serious plan to resolve Fannie Mae and Freddie Mac and fix the nation’s broken housing finance system. The system’s current dysfunction is evident: Nearly nine out of 10 U.S. mortgage loans today are being made by the federal government via Fannie Mae, Freddie Mac, the Federal Housing Administration, and the Department of Veterans Affairs (see Chart). Taxpayers are thus taking on the risks inherent in about $1 trillion in mortgage loans originated each year.2 This is unnecessary, given that private financial institutions are willing, and with some guidance from regulators, able to safely make these loans.

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U.S. Macro Outlook: Curb Your Enthusiasm

The U.S. economy is holding up well despite mounting fiscal headwinds, at least so far. Real GDP growth in the first quarter is tracking close to 2%, about average since the recovery began nearly four years ago. Consumers seem unfazed by the tax increases that took effect this year, and although the government’s spending cuts hurt, they have yet to significantly undermine growth.

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More on the Fiscal Cliff With CNN’s State of the Union

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How Lawmakers Should Address the Fiscal Cliff

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Discussing the Fiscal Cliff With Nightly Business Report

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Discussing the October 2012 Employment Data With CNBC


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