Tuesday, November 18, 2008

Whence our Subprime Crisis

HUD News Release from January 19, 2004:
Initiative Aimed at Removing Major Barrier to Homeownership

LAS VEGAS - As part of President Bush's ongoing effort to help American families achieve the dream of homeownership, Federal Housing Commissioner John C. Weicher today announced that HUD is proposing to offer a "zero down payment" mortgage, the most significant initiative by the Federal Housing Administration in over a decade. This action would help remove the greatest barrier facing first-time homebuyers - the lack of funds for a down payment on a mortgage.

Speaking at the National Association of Home Builders' annual convention, Commissioner Weicher indicated that the proposal, part of HUD's Fiscal Year 2005 budget request, would eliminate the statutory requirement of a minimum three percent down payment for FHA-insured single-family mortgages for first-time homebuyers.

"Offering FHA mortgages with no down payment will unlock the door to homeownership for hundreds of thousands of American families, particularly minorities," said HUD's Acting Secretary Alphonso Jackson. "President Bush has pledged to create 5.5 million new minority homeowners this decade, and this historic initiative will help meet this goal."


Anonymous said...

one more smoking gun with the government's fingerprints all over it. Yep, Its all the "free" markets fault. Sure.

Anonymous said...

He announced this in LAS VEGAS! How appropriate.

Paulie said...

Well.... it is the Free Market's fault, as long as you understand that the market has to co-exist alongside representative democracy.

You can either argue for un-bailoutable but uninterfered with markets in the context of the abolition of elected represesntatives (because they will always bail out any industry whose collapse would cause a 'systemic risk') or you can accept that the market needs to be regulated and interfered with a good deal more than it is.

But if you want to adopt the former position, you really should start arguing - loudly and clearly - for the abolition of elections.

Oh - and the idea that the sub-prime problem was wholy - or even mainly - a result of government interference is one that doesn't really stand up.

Here - have a look:


Eric Falkenstein said...

I don't think gov't is necessary and sufficient, but I think this mindset--ownership morally good, no risk--led to the overreach. Clearly many players all were necessary, none sufficient.