The need to rethink housing policy

A great philosopher writes in the New Republic:

Gretchen Morgenson and Joshua Rosner just published a major book, Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. The book is excellent in explaining the misconduct of executives who ran Fannie Mae and Freddie Mack. Yet it goes off the rails by overstating the role of these firms (and understating the role of others) in creating the housing meltdown and the closely-linked foreclosure crisis. Indeed, our current economic crisis should prompt us to ask more far-reaching questions about the origins of the crisis.

Looking back, many of us—and by “us,” I certainly include liberal Democrats—were slow to recognize the general dangers posed by the housing bubble, and the specific dangers posed by the political economy of government sponsored enterprises (GSEs). Many of us were also unduly credulous about the presumed benefits of home ownership. While perhaps not as easy to address, these uncomfortable questions must be raised if we hope to guard against the possibility of something of this magnitude from happening again.

More here. And no, we don’t get to pick the titles…

Author: Harold Pollack

Harold Pollack is Helen Ross Professor of Social Service Administration at the University of Chicago. He has served on three expert committees of the National Academies of Science. His recent research appears in such journals as Addiction, Journal of the American Medical Association, and American Journal of Public Health. He writes regularly on HIV prevention, crime and drug policy, health reform, and disability policy for American Prospect, tnr.com, and other news outlets. His essay, "Lessons from an Emergency Room Nightmare" was selected for the collection The Best American Medical Writing, 2009. He recently participated, with zero critical acclaim, in the University of Chicago's annual Latke-Hamentaschen debate.

5 thoughts on “The need to rethink housing policy”

  1. Yeah, hard-headed to a fare-thee-well; but also, a 100% soft-hearted, other-regarding, mensch at small and large scales.

  2. What is most interesting is how, despite this, the political class as a whole and especially liberals are missing the tocsin warning about the student lending bubble and the soon to burst higher Ed bubble that will reveal all that student loan lending to be even more destructive than the liar loans and such.

    In many states, although not in your illinois, borrowers being pulled under by an unwise mortgage can abandon ship and escape … They turn over the keys, walk away, and no deficiency judgment will pursue them for the rest of their days. Student loans, on the other hand, are where people not old enough to buy beer can acquire a lifetime promise of immiseration and hounding, as the loans lash them to their little ship like Ulysses.

    The bloodsucking vampire lenders tout the students’ rosy prospects, which is really just their own rosy profits making everything seem wonderful. The parasite class told their toadies in Congress to make sure that student loans couldn’t be discharged in bankruptcy and their lickspittle servants hurried to obey.

    Most people can see NOW what a dumb idea it was to allow people to borrow huge sums on ephemeral prospects in housing. Strange how few will allow themselves to see how much worse the student loan crash is going to be. Apparently the plan is to replace the draft with a backdoor military service plan, where the only people who will be able to afford university or even community colleges will be those drawing on the post-9/11 GI bill and the born-rich.

  3. I thought Mark followed Dean Baker’s lead and sold his place in LA, thus pretty much recognizing the bubble reasonably early.

  4. It makes sense that the student loan bubble should be missed by the literati, as the demographics of bad loans are skewed strongly toward lower-tier and for-profit institutions, which only the suckers consider colleges in the first place. (OK, that’s a bit of an overstatement, both on the skew and the reputations, but it’s a good description of the chattering-class perception.)

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