In yesterday’s research from Ed Yardeni, he quotes a WSJ article from August 17. Ironically, that article, which I missed, reinforces the point I made yesterday in my blog.
In the article, Edward Pinto, who was a top official at Fannie Mae in the late 1980′s, reminds us that Congress passed a law in 1992 that imposed affordable housing mandates on Fannie Mae and Freddie Mac.
In 1995, the department of Housing and Urban Development (HUD)announced a strategy to liberalize underwriting standards nationally. By 2006, an estimated 30% of home buyers had put no money down.
Hence the law of unintended consequences, and evidence reinforcing the idea that maybe the government should actually stay out of the housing business.
