The Role of Government Affordable Housing Policy in Creating the Global Financial Crisis of 2008

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM ^ | July 7, 2009 | U.S. HOUSE OF REPRESENTATIVES

[angkor]

In order that Freepers have direct access to it, I am re-posting this link to yesterday's report "The Role of Government Affordable Housing Policy in Creating the Global Financial Crisis of 2008" from the U.S. House of Representatives Committee on Oversight and Government Reform.

The link has been noted in at least two other threads today, however I believe that because it's (a) timely, (b) important, and (c) comprehensive, that it warrants its own thread.

And this version will get you straight to the report without having to wade through the snark of those other threads.

By the way, this is a Committee report, not a "Republican" report.

So without further ado, 26 pages of PDF:

http://republicans.oversight.house.gov/media/pdfs/20090707HousingCrisisReport.pdf

INTRODUCTION

The housing bubble that burst in 2007 and led to a financial crisis can be traced back to federal government intervention in the U.S. housing market intended to help provide homeownership opportunities for more Americans. This intervention began with two government-backed corporations, Fannie Mae and Freddie Mac, which privatized their profits but socialized their risks, creating powerful incentives for them to act recklessly and exposing taxpayers to tremendous losses. Government intervention also created “affordable” but dangerous lending policies which encouraged lower down payments, looser underwriting standards and higher leverage. Finally, government intervention created a nexus of vested interests – politicians, lenders and lobbyists – who profited from the “affordable” housing market and acted to kill reforms. In the short run, this government intervention was successful in its stated goal – raising the national homeownership rate. However, the ultimate effect was to create a mortgage tsunami that wrought devastation on the American people and economy. While government intervention was not the sole cause of the financial crisis, its role was significant and has received too little attention.

In recent months it has been impossible to watch a television news program without seeing a Member of Congress or an Administration official put forward a new recovery proposal or engage in the public flogging of a financial company official whose poor decisions, and perhaps greed, resulted in huge losses and great suffering. Ironically, some of these same Washington officials were, all too recently, advocates of the very mortgage lending policies that led to economic turmoil. In a number of cases, political officials even engaged in unethical conduct, helping their political allies, family members and even themselves obtain lucrative positions in the mortgage lending industry and other benefits. At a time when government intervention in private markets has become alarmingly common, government “affordable housing” initiatives offer important lessons about the dangers of government efforts to manipulate or conjure outcomes in the market.

[RC2]

Aren’t they talking about Barney Frank and Chris Dodd here?

[nclaurel]

Wow and the idiots under the direction of ACORN are again demanding to lower criteria to obtain mortgages. I wonder how much lower than “ain’t no way, no how I can pay the payments” they want to go?

[AliVeritas]

And check the background on the O re: housing (see slumlords)

Barack Obama - The Wizard of Oz
Saturday, 29 March 2008
http://www.scoop.co.nz/stories/HL0803/S00452.htm

**Barack Obama - Operation Board Games For Slumlords
Monday, 7 April 2008
http://www.scoop.co.nz/stories/HL0804/S00064.htm

Barack Obama - Subplots of Operation Board Games
Monday, 21 April 2008
http://www.scoop.co.nz/stories/HL0804/S00295.htm

Curtain Time For Barack Obama - Part I
Tuesday, 13 May 2008
http://www.scoop.co.nz/stories/HL0805/S00171.htm

Curtain Time for Barack Obama - Part II
Wednesday, 14 May 2008
http://www.scoop.co.nz/stories/HL0805/S00185.htm

Curtain Time for Barack Obama - Part III
Friday, 16 May 2008
http://www.scoop.co.nz/stories/HL0805/S00213.htm

Curtain Time for Barack Obama - Part IV
Saturday, 17 May 2008
http://www.scoop.co.nz/stories/HL0805/S00222.htm

Curtain Time for Barack Obama - Part V
Monday, 19 May 2008
http://www.scoop.co.nz/stories/HL0805/S00245.htm

[org.whodat]

http://www.freerepublic.com/focus/f-news/2288051/posts

[GVnana]

Thanks for the posting of the pdf on this!