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An unprecedented alliance of organizations from the real estate industry, new home builders, mortgage companies, banks, civil rights groups and other lobbyists have descended on Washington, D.C. lawmakers to push against legislation that would require 20% down payments for a mortgage.

There is nothing unprecedented about it. These are the rent-seekers who gave us our ruinous housing policy before. The reason I was so firm in my just say no testimony is that I have watched this mortgage lobby at work for more than two decades. If you want to make a documentary of the financial crisis that fingers the real villains, this is the gang you want to nail.

Another story concerns a re-org at Freddie Mac.


Carol Wambeke has been named the new chief compliance officer and Devajyoti "Doc" Ghose has been appointed senior vice president of Freddie Mac's investments and capital markets division, as well as the company's treasurer...Tracy Mooney has been promoted to a new role as senior vice president of single-family servicing and REO areas

Those are the only three names I recognize from the story. What strikes me is that they all are very decent people. None of them is the sort of aggressive, scheming, ambitious person that often gets ahead in an organization. It suggests to me that the current CEO is able to see through some of the more manipulative middle managers and instead promote good people. If so, then he has my admiration.


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COMMENTS (5 to date)
mark writes:

Bravo. You might also like Walter Russell Mead's recent column on "Fannniegate" in the American Interest, which draws on Gretchen Morgenstern's book. A great hearing could be held just having the authors read from that book.

Jack writes:

Suppose I were to ask the bank for a $400,000 loan, and I explain that I wish to invest the money in a poorly-diversified set of stocks. Odds are I'll make money, but there's a good chance I'll lose much of it. Oh, and I have no collateral.

(Not the most pedagogical example, but I think the point is clear. Right?)

liberty writes:

If the people demand a housing bubble - because they want to be able to borrow a huge amount, and invest in a depreciating asset called a house, and pay it back over a few decades in monthly principal and interest payments, much the way one rents a house from an owner otherwise - then if the market won't give this to them on its own (and of course it wouldn't) then a democratic system (unbound by a constitution outlawing it) will respond through interest groups, politicians and policy to give it to them.

liberty writes:

Perhaps there's no-one to malign, so long as the true victims of the bubble can be adequately compensated? But true victims are only those who did not choose this policy of creating the bubble (if they chose it then it was theirs to win or lose from). But, if we could compensate those, rich and poor, those who did not vote for or get monetarily involved in creating the bubble in the first place (which may not be many, but which is difficult if not impossible to know), then the bubble was just a choice to help people have affordable housing.

ed writes:

It seems like there is one group demanding down payments of, like, 3% or less, and others demanding 20%.

Is there anybody pushing for a compromise, like, say 10%? I think 10% would give us almost all the advantages of 20% (filtering out the riff-raff and fraudsters, putting skin in the game), with much less of the downside.

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