$3 trillion could be injected into the U.S. economy without any federal spending by tweaking this corner of the mortgage market, ‘Oracle of Wall Street’ says

The U.S. housing market is harboring the potential for unprecedented economic stimulus that wouldn’t require any federal spending, according to Meredith Whitney, the one-time “Oracle of Wall Street” who predicted the Great Financial Crisis.

While she has recently warned of the dangers that the “crisis of the American male” poses to the economy and the housing market, the CEO of Meredith Whitney Advisory Group highlighted the opportunity that a proposed reform to the mortgage market could represent.

In a column for the Financial Times on Friday, she noted that mortgage finance giant Freddie Mac asked its regulator last month to enter the secondary mortgage market, or home equity loans, which allow homeowners to borrow against the equity in their houses.

Such borrowing can be used for things like vacations, weddings, new cars, investments, medical bills, paying down debt, or starting a business. In other words, it’s more money that could power the economy.

Freddie Mac is best known for its role in buying first-time mortgages, pooling them together, and selling them to investors as mortgage-backed securities. This allows lenders to get those mortgages off their balance sheets, freeing up liquidity for more loans.

Letting Freddie Mac do this for home equity loans could start putting $1 trillion into consumers’ wallets as soon as this summer and $2 trillion by the autumn, Whitney estimated. If fellow mortgage giants Fannie Mae and Ginnie Mac follow along, the potential stimulus could top $3 trillion, she added.

Their involvement in home equity loans would come as banks have slashed their participation following the financial crisis. Home equity loans outstanding have plunged to $350 billion today from more than $700 billion in 2007, just before the financial crisis, according to Whitney. And that’s even has home prices have shot up over 70% in that span.

“The Freddie Mac proposal could change all that, and it could not come at a better time,” she said. “Most people in the U.S. are feeling the sting of persistent inflation, but older Americans living on a fixed income have been hit particularly hard.”

She cited rising costs for homeowners insurance and property taxes, forcing older Americans to take on more debt. That’s left them vulnerable to unexpected expenses or other financial shocks.

While the lower-than-expected April jobs report showed wage growth cooled, other economic data indicate consumer demand has remained robust, keeping upward pressure on inflation. That suggests right now may not be the best time for trillions of dollars of more stimulus, especially as inflation has remained stubbornly above the Federal Reserve’s 2% goal.

Still, Whitney said expanding the ability to tap home equity loans would provide “big stimulus to an economy and consumer that appear to be slowing down without adding a dime to government debt. Rarely have I seen such a true win-win scenario for the government, Wall Street and the U.S. consumer.”

This story was originally featured on Fortune.com