Follow up to my post from Thursday

by Laura Ehrenberg-Chesler on August 20, 2010

in Credit Crisis,Debt,Residential Real Estate

In yesterday’s research from Ed Yardeni, he quotes a WSJ article from August 17.  Ironically, that article, which I missed, reinforces the point I made yesterday in my blog.

In the article, Edward Pinto, who was a top official at Fannie Mae in the late 1980’s, reminds us that Congress passed a law in 1992 that imposed affordable housing mandates on Fannie Mae and Freddie Mac. 

In 1995, the department of Housing and Urban Development (HUD)announced a strategy to liberalize underwriting standards nationally.  By 2006, an estimated 30% of home buyers had put no money down.

Hence the law of unintended consequences, and evidence reinforcing the idea that maybe the government should actually stay out of the housing business.

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