2008-10-03 How Government Stoked the Mania

Specs

Date:	2008-10-03
Link:	http://online.wsj.com/article/SB122298982558700341.html
Author:	Russell Roberts (writingscat)
Source:	Wall Street Journal (articlescat)
Topics:	2008 financial meltdown Fannie Mae Freddie Mac Department of Housing and Urban Development Community Reinvestment Act Bear Sterns Taxpayer Relief Act of 1997 US economy
Categories:	2008 financial meltdown Fannie Mae Freddie Mac Department of Housing and Urban Development Community Reinvestment Act Bear Sterns Taxpayer Relief Act of 1997 US economy

How Government Stoked the Mania

longer text

Part of the answer is a political class greedy to push home-ownership rates to historic highs -- from 64% in 1994 to 69% in 2004. This was mostly the result of loans to low-income, higher-risk borrowers. Both Bill Clinton and George W. Bush, abetted by Congress, trumpeted that rise as it occurred. The consequence? On top of putting the entire financial system at risk, the hidden cost has been hundreds of billions of dollars funneled into the housing market instead of more productive assets.

shorter text

“Housing prices would never have risen so high without multiple Washington mistakes.”