On Friday, the Federal Reserve Bank of New York issued a staff study on U.S. mortgage intermediation, finding that intermediation costs have risen significantly in recent years due largely, it says, to regulatory costs.  During the period studied, the role of the GSEs and FHA sharply increased from the pre-crisis period but intermediation costs – i.e., those borrowers bore to ensure originator or issuer spread – also rose dramatically.  From this fact — likely to be bandied about quite a lot in the forthcoming GSE debate to show no one needs the government – a lot of policy conclusions could be drawn, but we think the study is far from conclusive and offers only an interesting data point for debate.

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