This is the Cato Daily Podcast for Monday, October 18th, 2010.

I'm Caleb Brown.

The housing market's much-needed correction will continue.

The White House has opted not to call for a moratorium on foreclosures.

Delaying legal foreclosures would have just made worse the problems in the housing market.

So says Mark Calabria, Director of financial regulation studies at the Cato Institute.

Clearly in the short term, the continued policy responses to try to prolong the foreclosure process are also

prolong in the adjustment of the housing market. But there are also bigger

questions in terms of you know there's a very big debate going on, what should the future of our housing finance system look like?

I think there's a pretty much consensus left, right, center, whatever, that Fannie and Freddie, for instance, have failed us and we need a new system.

I think there's a very big part of that consensus that also says that that new system needs

to be based on private capital.

That it can't be the government paying everybody's mortgage,

you're guaranteeing everybody's mortgage in the future.

However, if you are in a situation as we are in today

where there's a potentiality for as an investor in mortgages, you to lose considerable amount of your investment because

of uncertainty, the legal rules or changes in the legal rules, then you raise the possibility that investors

start to ask themselves, is it really worth the risk of putting my money and mortgage investments?

And we are very much seen today.

It's an important thing to emphasize that despite the way it gets characterized in the press,

this is not so much about borrowers versus lenders.

The real hit for this is not going to be on the lenders.

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