Housing policy in the United States has copied the fascist model for housing ever since 1934, when the FSLIC was set up: government-guaranteed savings and loans. This was part of the well-named National Housing Act. It subsidized middle-class housing by guaranteeing Federal Savings and Loans against “bank runs.”
The essence of economic fascism is simple: a government-business alliance. There were two versions: the European version and the American version. The European version put the government in charge, which the private sector paid for in lost freedom. The government ran the show. The private sector took the blame for shortages. The American version put the investors in charge, with the taxpayers on the hook for major losses.
Housing fascism keeps notching up in the United States. In 1937, it was extended to direct loans from the government for poor people, meaning the comparatively few poor people who were able to get to the front of the long line for subsidies. It was extended again in 1949. In the mid-1980s, the savings and loan bank runs pulled the trigger on the government’s loan guarantees. The taxpayers ponied up to bail out the busted S&Ls. Then came September 2008, when Treasury Secretary Hank Paulson unilaterally nationalized Fannie Mae and Freddie Mac on his own authority. He simply went in front of the TV cameras and announced it. He invented a new word for nationalization: “conservatorship.” Congress said nothing.
Now the Senate is putting together a bipartisan bill to make it official. The government will set up the Federal Mortgage Insurance Corporation, which sounds like it is part of the private sector. The financial media are aghast: there is no way to turn FMIC into a clever acronym, like Fannie Mae or Freddie Mac. Mickey Finn is close to the real meaning, but I don’t think it will catch on.”The Federal Mickey” is what it is, but that’s too close for comfort.
The details are not being released until the lobbyists have hammered out a compromise. It will guarantee the mortgage market. It will continue to guarantee trillions of dollars worth of packaged mortgages, which the Federal Reserve will continue to buy with newly created counterfeit money. This is what the voters want. This is what they will get.
This is fascism. It has been fascism ever since 1934. It removes the threat of free market negative feedback, thereby removing risk from both the lenders and the borrowers. It guarantees a new housing bubble. But American housing has been in a bubble since 1934. It is the basis of “the American dream.”
Fascism: it’s a wonderful life. “Merry Christmas, Mr. Potter. And Happy New Year, too.”