In the latest Financial Services Outlook, American Enterprise Institute (AEI) housing policy experts Peter Wallison and Edward Pinto explain that:

• The Federal Housing Administration (FHA) uses lax accounting standards that obscure the fact that it is deeply insolvent, with a looming shortfall of tens of billions of dollars that American taxpayers will have to make up.
• If it were a private firm, regulators would shut it down.
• Congress only made matters worse by recently raising the FHA's (conforming) loan limit; now it must enact reforms to prevent a massive taxpayer bailout of the FHA.

The Arthur F. Burns Fellow in Financial Policy Studies at AEI, Peter Wallison previously served as general counsel of the Treasury Department, White House counsel to President Reagan, and as a commissioner on the Financial Crisis Inquiry Commission. He can be reached at pwallison@aei.org or through steffanie.hawkins@aei.org.

Edward Pinto was a an executive vice president and chief credit officer for Fannie Mae. He has done groundbreaking research on the role of government housing policies in the lead-up to the financial crisis. Pinto is available for interviews and can be reached at edward.pinto@aei.org or through steffanie.hawkins@aei.org.

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