It was the desire to maximize the tax deduction that helped drive normal folk into the equity loan market — use it or lose it – lower cost money.

It’s actually pretty great for society when most 50+ year old folk own their own homes; but this means at least 51% of equity is theirs, not the unpaid balance.

Whether it’s 10, 15, 20, or 30 year loans is far less important than the other policies around debt, interest, and owner-occupancy.

You’d have to be the kind of person who gave a fuck about random strangers operating in a less efficient housing market enough to overcome institutional inertia and special interests to make this change. Does the current Republican party strike anyone as being described that way?

At best you could describe them as pharisees on issues like this. Whatever hand wringing over doctrine pharisees go through, they don’t really care enough to change their actions.

They had lost 40% of market share during the bubble, and this was how they dealt with it. I would never say the GSEs were innocent, but they were not directed by government policy. IMHO, Mudd at Fannie should have been indicted for his lack of due diligence.

Meanwhile, the bailout of the GSEs certainly helped them(while saving our mortgage market) bit it also saved the investment banks, all of whom had committed fraud in the reps and warranties on the loans they sold to the GSEs. That is plainly shown in the FCIC report.

Fannie and Freddie came late to the party, but they came, they came big because they are big. Luckily for them, shortly after they came was the crash. So, they get to almost plausibly claim they didnt start the fire. But I would not be as interested in percentages as I would be in sums.

With an implicit bailout and lower capital costs you can cherry pick the best credit risks and eat the alpha gap, but that doesn’t really mean anything necessarily. Not anything good.

Any serious discussion of the US mortgage market should not include anything that Pinto or Wallison say. Besides being driven totally by ideology, they are snakes:

“3. For additional fun, the fact that we now know that Wallison leaked the critique of Pinto’s work creates an important timeline. From Leonard Architect:

“I get this memo criticizing Pinto’s data — what was I supposed to do?” [Wallison] told Huffington Post. “Pinto should be the one to respond to criticism of his data.”

Pinto got the opportunity, but he offered no response. He delivered three additional memos, here, here, and here. But he never responded to core criticism in the FCIC staff memo, which identified the fatal flaw in Pinto’s misguided labeling scheme.

From the oversight report, we know that Wallison leaked the FCIC memo to Pinto so he could address the arguments between August 9th and August 14th, 2010. The three additional memos Pinto submitted to the FCIC linked in the Architect piece above were draft date August 14th, October 10th, and November 4th, 2010. And evidently they didn’t address the argument at all.”

https://rortybomb.wordpress.com/2011/07/15/three-additional-points-on-the-gses-aei-and-fcic-report/

Course this was done when the Reps held the legislature and the presidency, and the OCC forbid state governments from regulating national banks. The Supreme Court agreed with the OCC, and now the big boys got into the market in a big way and the rest was history.

Somehow we get speeches from a powerless congressman as a reason for a problem yet ignore facts like this. Powerful bubble you got there.

http://www.forbes.com/2007/04/17/scotus-banks-wachovia-biz-wallst-cx_lm_0417scotus.html