WASHINGTON, Jan. 25 (UPI) -- The U.S. government's plan to wind down help for the troubled housing market is a big stakes gamble whose time has come, a Treasury Department official said.
Support for the housing market that collapsed three years ago, undermining the nation's credit system, has come in the form of low Federal Reserve bank-to-bank interest rates, Treasury Department support for Freddie Mac and Fannie Mae, the Fed's $1.25 trillion mortgage-backed securities purchasing program and other measures. But the Treasury stopped buying mortgage-backed securities in December and the Fed plans to stop March 31, The Washington Post reported Monday.
"We did what we thought was necessary," said Treasury Department assistant secretary Michael Barr, who said market has now stabilized.
National Association of Realtors Chief Economist Lawrence Yun warned a backslide is possible. "We have cautioned the Fed about the sudden stoppage of this program," he said.
It may take a another crisis, however, for the government to change direction at this point, the Post said.
"This is a worthy experiment to see if they can begin exiting after providing an unprecedented amount of money to one sector of the economy. It's a close call, though. I can see why they are debating it," said Mark Zandi, chief economist at Moody's Economy.com.
