This is the Cato Daily Podcast for Thursday, January 19th, 2012.

I'm Caleb Brown.

Some Federal Reserve officials are claiming the federal government hasn't intervened enough in the housing market.

Leaving aside everything the feds did to keep that bubble inflated, these further interventions

may serve mainly to keep new capital from pouring into housing to spur that much desired recovery.

So says Mark Calabria, director of the Cato Institute's Financial Regulation Studies.

The ongoing weakness in housing has made it more difficult to achieve a vigorous economic recovery, said William Dudley, the New York

Fed. With additional housing policy interventions, we could achieve a better set of economic

outcomes. So what are they complaining about and what do they want done?

Well, and it's worth prefacing that the Federal Reserve Board had sent a paper to Congress on housing options.

This is highly unusual. I mean, this is a policy area outside of the Federal

Reserves normal purview and for them to speak in it in this way, you know, really is

unprecedented in recent times. In the frustration on the part of the Fed is really in the

part of the Fed is really because the housing market tends to be a primary vehicle

through which monetary policy acts. I mean if you think about it the Fed moves interest rates the

housing market is almost always the first part of the economy to respond and it's

also maybe where the most power was Fed felt in terms of if you think about the typical

household asset as housing. So let's say the Fed lowers interest rates and

under normal conditions housing prices might go up you and I feel a little

healthier and the theory is we go out and spend and that drives the economy.

And so that has long been the mindset of the Federal Reserve.

And of course we saw this with other actions of the Federal Reserve trying

...