Loan Shark above makes the reasonable request that factual points be challenged on merits and not rhetoric. A couple jump out on a first reading: CRA only applied to commerical banks and thrifts and NOT to other mortgage originators; the GSE’s WERE NOT backed by the Fed Gov (though people believed what they wanted).

But truth be told, most all of us are now dependent upon the reports and recollections of people directly acquainted with the deeds of the time, and we’re catching up reading other essays as well, e.g., the brief article on the role which compensation practices played in generating bad loans. Given that fact, people are going to reasonable identify whose interest is served by which ordering and emphasis on who did what when.

The essay concludes with the polemical charge that we got here through a failed socialist experiment. It is not unfair to suspect that the essayist is more interested in serving the interests of a rentier class than in solving a real problem – affordable housing. It may well be true that Fannie/Freddie were doomed once they were required to serve two masters – profit and home. Their doom is no refutation of the merits of the goal and the values pursued: People who have stakes in their residence make for better neighbors and communities.

Stakeholding, we are told, is the motive that makes private enterprise virtuous and successful. Why should holding a stake in one’s dwelling be different?

1) how did changes in tax policies over the past 10 years affect incentives for developers, buyers and lenders?

2) how did the evisceration of the limited social safety net in the 1990s affect fiscal and monetary policies during downturns (e.g., 1998 and 2000-2003) that spurred the housing bubble? The fear of even modest recession (and 2001-2 was surely modest) led to herculean “bail out” efforts.

as a developer I can argue from experience that tax policy had everything to do with my business strategy and performance. In short hand, the strategy was “take the money and run.”

Hell hath no fury like a homeowner scorned.

“Why am I being punished for having bought a house I could afford? I am beginning to think I would have rocks in my head if I keep paying my mortgage.”
Todd Lawrence, homeowner, outside Norwich, Conn.

“I guess they are forcing me to deliberately stop paying to look worse than I am. Crazy, don’t you think?”
Anonymous Countrywide borrower, Los Angeles

(Quotes via Calculated Risk.)