relaxing standards appropriately for buyers, or to get renters off of the rental hamster wheel and into equity positions isn't bad policy. on the contrary it makes sense for any number of reasons and it's the basis of us ownership society tax policy since at least wwii. the breakdown came from predatory lenders (not fannie/freddie) who lowered standards to get owners to refinance with balloon mortages that couldn't possibly be repaid when the introductory payments reverted to sky high levels. like payday loans this was actually a plan. the lenders would take possesion at default for peanuts, sell and profit. it worked, as long as defaults in any one area were below levels that affected general pricing. this was not a clinton policy, it was old time private enterpise predation that occured in the post clinton years on a massive scale while regulators slept.
i have a simple test for housing bubbles: when you hear bartenders are bragging about "flipping condos" take cover. the bragging was deafening in the lates eighties and mid 00's.
- js.
|