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Community Development

The Devil's in the Tail: Residential Mortgage Finance and the U.S. Treasury

The future role of the federal government in housing finance is a subject of recent debate and discussion. Contributing to this dialogue, Atlanta Fed economists Scott Frame and Larry Wall and Professor Lawrence J. White of New York University have authored a research paper that provides an overview and assessment of recent policy proposals. Presented at the Atlanta Fed's 2012 Financial Markets Conference, the authors acknowledge that there appears to be a broad consensus to maintain government guarantees for certain narrowly defined borrower populations. However, they note that the role of the federal government in the broader housing finance system remains in dispute, ranging from no role to insuring against only extreme or tail events to insuring against all losses.