Posted on 12/04/2009 5:03:46 PM PST by Kaslin
This is the fourth of five parts of a Monday series excerpting Thomas Sowell's latest book, "The Housing Boom and Bust."
His warnings, like those of the secretary of the treasury and the head of the Federal Deposit Insurance Corp., were delivered directly to Congress, while testifying there. Greenspan over the years moved from expressions of mild concern to a more dire view of the situation.
In 2005, Greenspan testified: "Although a bubbling in home prices for the nation as a whole does not appear likely, there do appear to be at a minimum signs of froth in some local markets where home prices seem to have risen to unsustainable levels."
Greenspan did note "the prevalence of interest-only loans, as well as the introduction of other relatively exotic forms of adjustable-rate mortgages" as "developments of particular concern." But he added:
"Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macro-economic implications."
Although Chairman Greenspan at this point seemed not to expect major problems from the housing booms in various localities around the country, he was already apprehensive about the longer-run consequences of the expansion of Fannie Mae and Freddie Mac.
(Excerpt) Read more at investors.com ...
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Part IV of five part series on "Housing Bust"
My Pleasure
Thanks, Kas. This needed to be printed. And there are still people on FR who want to blame the housing bubble on Pres. Bush.
Major bookmark. Thanks for posting this info. Can’t wait to catch up in the series of articles.
Thanks for the ping jaz.
Who?
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