The Housing Boom and Bust

A MINORITY VIEW

BY WALTER WILLIAMS

RELEASE: WEDNESDAY, MAY 27, 2009

Hot off the press is my colleague Dr. Thomas Sowell's 43rd book, "The Housing Boom and Bust." The book is an eye-opener for anyone interested in the truth about the collapse of the housing market that played a major role in our financial market crisis.

The root of the problem lies in Washington. The Community Reinvestment Act of 1977, later given teeth during the Bush and Clinton administrations, forced financial institutions to make risky mortgage loans they otherwise would not have made. President Clinton's Attorney General Janet Reno threatened legal action against lenders whose racial statistics raised her suspicions. Bank loan qualification standards, in general, came under criticism as being too stringent regarding down payments, credit histories, and income. Fannie Mae and Freddie Mac, two government-sponsored enterprises, by lowering their standards for the kinds of mortgage paper they would purchase from banks and other mortgage lenders, gave financial institutions further incentive to make risky loans...

But Barney Fwank, Chris Dodd, Maxine Watters, et. al., said that Fannie and Freddie were fine! Just a reminder for those that may not know Dr. Sowell or may want to argue with him, he is a Senior Fellow at The Hoover Institute at Stanford Universtity and Professor of Economics .