Bernanke Pledges to Help the Housing Market, but Not Everybody is Happy About It

In case you missed it, the housing market can expect to get a boost from the Federal Reserve in the months to come. In a recent speech in Atlanta, none other than Federal Reserve Chairman Ben Bernanke himself said that the housing sector would receive special attention from the body as it pursues a record round of easing to prop up the sluggish recovery.

Here are some of the highlights from the speech, as reported by Bloomberg.com.

– The Fed’s current easing plan will buy up roughly $40 million in mortgage-backed securities with government dollars, which the Federal Open Market Committee believes will help solidify the fledgling recovery in the housing market.

– Bernanke emphasized moves by the Federal Housing Finance Agency as well as Freddie Mac and Fannie Mae to loosen barriers to mortgage credit.

This is significant because Bernanke is clearly warming to the idea that credit has become too restricted post-crash and now creditworthy borrowers are being restricted from entering the housing market.

– Ultimately, Bernanke said a more complete economic recovery would be the most important factor in boosting the housing market. However, gains in the housing market have rippled into the economy as a whole, boosting retail sales at companies such as The Home Depot. The article cited data from the Commerce Department showing that Americans bought houses at the fastest pace in two years in September.

Of course, not everyone is happy with the Fed’s medicine for the long-ailing housing market. For the ultimate skeptic’s take, the blog OCHousingNews is strongly critical of Bernanke’s strategy.

OCHousing’s main point: Interfering in the housing sector in this way, by buying mortgage-backed securities, continues a dangerous break from regulatory tradition. Essentially, the housing market won’t sort itself out until the Fed backs out.

What’s your take? Do we need more federal intervention, or less?