Calculated Risk chart that shows negative equity by state:
The financial reform legislation didn't touch Fannie and Freddie. About that, the WSJ reports Paul Volcker says:
[SmartMoney]: What’s missing [from the financial-regulatory overhaul]?
Mr. Volcker: People talk about Fannie Mae and Freddie Mac. That’s a challenge for next year and year following. We are going to have to reconstruct the whole mortgage market and you can’t do that overnight. The mortgage market now is almost a wholly owned subsidiary of the United States government. Almost all the mortgages made now are insured by the government, bought by the government, and the guys at Fannie Mae and Freddie Mac are the market.
Not much exists without the government running it. I don’t think that’s what we want. A lot of problems surround the whole mortgage market. It’s clear Fannie Mae and Freddie Mac need to go. [emphasis added]. We don’t need these hybrid institutions. You don’t know whether they should be responsible to the government or to stockholders. It’s an unfortunate invention.
On the legislation, the IMF released its assessment summarized in the NYT:
The financial overhaul bill signed by President Obama last week failed to simplify the complicated regulatory architecture that oversees the banking and securities industries, according to an assessment by the International Monetary Fund.
The assessment, which is being released Friday along with a periodic I.M.F. review of the American economy, found that the effectiveness of the Wall Street reform act will rely heavily on how it is carried out.
The assessment also found that the United States faces hard choices in determining the future of Fannie Mae and Freddie Mac, the two mortgage-finance entities that were seized by the government in 2008. It suggested that the government break up and privatize current portfolios of the companies while transferring their responsibilities for promoting home affordability to a new government agency.
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