Here are questions asked on the FM website this week (some of these were assertions, which I’ve rephrased at questions). Click on the question to go directly to the answer. Did FNMA and the other Government Sponsored Enterprises cause the sub-prime mortgage crisis? Did the Community Reinvestment Act cause the housing crisis? (1) Did FNMA and the …
No, but we’ve taken big steps in that direction. For example, the government owns a large insurance company (AIG).  More importantly, it has nationalized 95% of the single largest component of the financial sector: home mortgages. From “Recent Developments in Mortgage Finance“, John Krainer, Federal Reserve Bank of San Francisco Economic Letter, 26 October 2009. Federal Housing Administration …
One of the most fascinating narrative threads on this site has been about the oversupply of homes (technically “housing units”). This over-building of units is the key to the housing crisis, as has been evident for at least 2 or 3 years. A surplus of anything leads to falling prices until the surplus disappears, one …
The housing crisis allows America to look in the mirror. What do we see? Read More »
