Shortly after the erection of Fannie Mae, and nearly 30 years before that of Freddie Mac and the legislation of the Community Reinvestment Act, Henry Hazlitt was there. The voice of the Austrian school could see it with his refined eye, as only he could. 'It,' of course, is the unseen consequences of government action.
From the Fiftieth Anniversary edition of Economics in One Lesson, p. 33-4:
"The case against government-guaranteed loans and mortgages to private businesses and persons is almost as strong as, though less obvious than, the case against direct government loans and mortgages. The advocates of government-guaranteed mortgages also forget that what is being lent is ultimately real capital, which is limited in supply, and that they are helping identified B at the expense of some unidentified A. Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to "buy" houses that they cannot really afford. They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in the long run they do not increase overall national production but encourage malinvestment."