False. Businesses have an optimuum size. Trees do not grow to the sky. Normal businesses notice negative feedback quickly. Government backed business who are in the business of printing money for property are trapped in a positive feedback loop that will only end when the system runs out of gain.70% homeownership is pretty amazing. How are we going to beat that?
Fannie has every incentive to grow...It has absolutely no incentive to find its correct size.
Gee, everyone has cars, does that mean that auto manufacturers are all doomed? Of course not. Their business model is repeatable. They can sustain whatever size that they grow to if they can handle the competition.
That's FNMA. FNMA has billions in profitable revenues coming in every month. It can loan out lots of new money at low interest rates and rest assured that it will continue to be successful.
And by the way, 70% homeownership isn't important to FNMA. No, it's how many homes need loans that matters. Even if America reached 100% homeownership, there would still be a demand for new home loans as people moved up, moved down, moved away, etc. In fact, it wouldn't even be a problem if no new loans were needed (an impossibility). No, what matters to FNMA is to get paid one way or another on what they have already loaned out.