Will the real culprit of the real estate crisis please stand up?

Who’s To Blame And What Is There To Learn?

Don't blame Wall Street and the Banks for filling the pipeline of easy money for "affordable housing" in America.  The U.S. Government enacted policies and laws to facilitate home ownership and guess what Uncle Sam?  If you build it - they will come.  And they came in droves to the American Dream and it's now a living nightmare for millions who took out more debt than they could possibly repay - at any interest rate.  How did this happen? Here's but one example:

"I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.
- Representative Barney Frank, 
September 25, 2003. 

So now you know why the Government bailed out the financial industry that caused the housing crisis.  Washington created the housing bubble through policy extended in the process of capitalism and in capitalism, the Government is both the lender and borrower of last resort. Just don't forget, we are the Government (you know "For the People, By the People...").

So where does this leave note holders and borrowers?  Perhaps  The Wall Street Journal headline of November 24, 2009 says it best, "1 in 4 Borrowers Under Water".  Where does it put our policy makers in Washington? Burdening future generations with a national debt guaranteed to lower taxes (as applied to interest rates since 9/11) and nationalism at the forefront of enterprise.

Ironically, while the U.S. has operated on a philosophy of privatizing profits and socializing losses for decades, if the financial firms Washington bailed out repay the billions "borrowed", socializing profits would occur and tax rates should drop. Is this the Trump card? Who knows, maybe these profits provide a health care program for baby boomers and less populated generations thereafter and they replenish social security on the way.  Talk about the American Dream:  there you have it.

When you blame anything or anyone for something, you're rendered powerless in the moment.  So what is there to learn here?   Here's an analogy . . .

The U.S. economy is no different than 7-11.  Americans are convenience addicts and our shelves are well stocked and evidence of our Government at work is on nearly every corner.  When we shop at 7-11, we're willing to pay more for things for the convenience of having it now.  Just like we did in the housing crisis.  Two things we can count on: our Government delivers a consistent  "7-11 will have it" experience and we're proud to be Americans.  To paraphrase the 7-11 slogan, "Oh Thank Heaven for America".

Views: 17

Comment

You need to be a member of Real Estate Finance to add comments!

Join Real Estate Finance

© 2024   Created by Admin.   Powered by

Badges  |  Report an Issue  |  Terms of Service