The Federal Home Loan Bank model is more than sufficient to provide a method for smaller banks to spread their risks while maintaining skin in the game. The reason the housing market is weak is not lack of financing nor high borrowing costs thirty year mortgages are at 4.25%, but excess supply particularly of high end homes. If there is an excess of MacMansions in Venice, Florida increasing the supply of mortgages will not move them off the market.

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via Malcolm C. Harris, Sr. | The Economist.