Covering the Private Parts: The (re-)Nationalization of Housing Finance in the United States

Is state power or control over financial markets really withering? Most narratives/analyses of financialization see a growing penetration of private capital into everyday life that runs parallel to the increasing power of private financial capital over state policy. Yet one of the four most important welfare state pillars and the central pillar of the US financial system remains firmly under state control: housing finance. Mortgage backed securities issued by the re-nationalized mortgage giants Fannie Mae and Freddie Mac are the core of the securitization market, and altogether 80% of securitized bonds in the United States carry a government guarantee. Additionally, the Federal Reserve system currently owns over one-fifth of all MBS. On the liability side, over 70 % of household debt is housing related and MBS play a crucial role in repo markets. What does this overwhelming state presence tell us about the private financial power and the inherent instability of capitalist financial markets? Were financial markets ever really private?