Joshua Rosner, Columnist

How to Turn Homes Back Into Piggy Banks

The demise of a bipartisan plan to reform U.S. housing finance presents an opportunity to do things right.

May 22, 2014 at 11:03 AM UTC

Joshua Rosner is managing director of independent research firm Graham Fisher & Co. and co-author of the book "Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon."

These should be savings accounts. Photographer: Patrick T. Fallon/Bloomberg — These should be savings accounts. Photographer: Patrick T. Fallon/Bloomberg

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A bipartisan effort to address one of the biggest issues left over from the financial crisis -- what to do with mortgage-finance giants Fannie Mae and Freddie Mac -- appearsto have died in the Senate. Its demise should be seen as an opportunity to reframe the discussion of housing and the role it can play in the creation of wealth for Americans.

Proposed by South Dakota Democrat Tim Johnson and Idaho Republican Mike Crapo, the initiative sought to eliminate Fannie and Freddie and reshuffle the roles of various financial players in the mortgage market. Unfortunately, it largely ignored the reasons the government should focus resources on housing in the first place.