Why are we guaranteeing private contracts?

Interesting article in The Wall Street Journal about the federal government charging a fee to lenders in order to finance guarantees of mortgages. Mortgages are just contracts between private entities and individuals to buy money. Why is the United States government guaranteeing the performance of private contracts in the first place?

Let the lending community create their own pool of funds to back up the mortgages they hold. As a private contract, the risk of performance should be borne by the parties making the market.

The federal government has yet to make a cogent case that it should be bearing the risk and eventually passing this risk on to the American citizen.

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
This entry was posted in centrism, Economy, Financial Regulation, Political Economy and tagged , , , . Bookmark the permalink.

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