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Senior Advisor

Housing financial crisis, here we go again

Almighty Big Government at it's best.



So surely government regulators would avoid taking any action to reduce lending standards again, right? Better safe than maybe $14 trillion in the hole, right? Not so much. From the Wall Street Journal story “In Reversal, Administration and Fannie, Freddie Regulator Push to Make More Credit Available to Boost Housing Recovery”:

The Obama administration and federal regulators are reversing course on some of the biggest postcrisis efforts to tighten mortgage-lending standards amid concern they could snuff out the fledgling housing rebound and dent the economic recovery. On Tuesday, Mel Watt, the newly installed overseer of Fannie Mae and Freddie Mac, said the mortgage giants should direct their focus toward making more credit available to homeowners, a U-turn from previous directives to pull back from the mortgage market.

And who have been the folks crying about those tightening standards, such as forcing borrowers to put 20% down if the bank didn’t retain at least 5% of the loan before it was sold to investors. The usual suspects, (via the WSJ):

The March 2011 proposal triggered a huge outcry from lawmakers, affordable-housing groups and the real-estate industry, all of whom said it would put the brakes on homeownership for millions of credit-worthy borrowers, particularly first-time buyers and minorities.

Here is AEI’s Ed Pinto: “This is ‘deja vu all over again.’ It will put into motion policies which will fuel another housing boom—in the effort to put families with limited resources and poor credit histories into highly leveraged loans. This policy has been a failure since it began around 1960. It places low income borrowers with a high degree of income volatility into loans with the greatest amount and varieties of leverage so as to enable them to buy homes in neighborhoods with the highest levels of house price volatility.”

4 Replies

Re: Housing financial crisis, here we go again

When did the first crisis end? I wasn't 't aware that it had. Nice codification in the AEI piece snip also.
Senior Advisor

Re: Housing financial crisis, here we go again

@bruce MN wrote:
When did the first crisis end? I wasn't 't aware that it had. Nice codification in the AEI piece snip also.

Who said it ended. We're getting ready to double down on stupid. Maybe the blond haired blue eyed Indian will step in with some sanity.

Re: Housing financial crisis, here we go again

There's always been more than sufficient complexity in the matter to make it simple for anyone to put forth a meme that appeals to a particular ideological position.


Nevermid that AEIs member list contains many of the prime players in hte private label mortgage securitization game that was the prime casue of the crisis. That space exists outside of the reach of the government with the exception of SEC requirements that the underlying securities not be fraudulent. Unfortunately government failed in that essential duty.


I think there is plenty there to mount an anti-government argument. though. I doubt that lowering down payments for otherwise qualified buyers is likely to help a lot of people- the problem is mostly a lack of qualified buyers- a problem that didn't exist in the heyday of private subprime.


More likely to benefit are banks that may be able to get a few more properties off their balance sheets and the private equity operators who have scooped up masses of proerties for securitization,  have elevated a lot of markets and are in a race to get the stuff bundled, securitized and sold to widows and orphans.

Senior Advisor

Re:Lesson to be learned

The housing market is improving. New lands are being opened up for development. Houses values are appreciating. Spend a little time scouring zillow and trulia and you will note the increase in home values.


New homes going up in tulsa like they were seeded with an endgate seeder. Construction is moving ahead as demand for homes increase. People less likely to buy are gaining confidence as jobs become more secure.


More demand for housing loans does not equate to lowering standards. What it means is there is  more demand for what they are selling. Whay it means is that consumer confidence is rising.


However, any improvment in the economy would be bad news to Fox news or the murdoch owned  Wall street journal or the american enterprise institute. After all any improvement  during the obama era is against their objective. They are counting on a complete collapse of anything positive and are doing their very best to insure that.