{"id":9531,"date":"2011-05-27T10:52:01","date_gmt":"2011-05-27T14:52:01","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=9531"},"modified":"2011-05-27T10:52:01","modified_gmt":"2011-05-27T14:52:01","slug":"colby-cosh-it-wasnt-a-market-failure-that-caused-the-sub-prime-fiasco","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2011\/05\/27\/colby-cosh-it-wasnt-a-market-failure-that-caused-the-sub-prime-fiasco\/","title":{"rendered":"Colby Cosh: It wasn’t a market failure that caused the sub-prime fiasco"},"content":{"rendered":"

He’s quite right, not that the powers-that-be will take away the correct lesson from the experience<\/a>:<\/p>\n

\n

What I see when I look at the origins of the financial pandemic is the story \u201cgovernment-sponsored enterprises that subsidize crazy lending practices and puppetize legislators fail.\u201d Mortgage-writing institutions did things throughout the late 1990s and early oh-ohs that weren\u2019t just likely to turn out badly; they made enormous amounts of loans that were practically certain to go bust in the short-to-medium term, loans that your mother could have told you would go sour. It wasn\u2019t a \u201cfree\u201d market that relaxed mortgage underwriting standards to the point of annihilation; it wasn\u2019t a \u201cfree\u201d market that put unskilled workers in million-dollar homes in the Sand States, or that spent too long ignoring the rising default rates that resulted.<\/p>\n

We know this, in part, because we know how slightly freer mortgage markets traditionally behaved; they \u201credlined\u201d the living heck out of low-income neighbourhoods. Because redlining resulted in racial discrimination — critics would just say it is<\/em> racial discrimination — there has been a concerted attempt among economists to absolve the major U.S. anti-redlining statute, the Community Reinvestment Act of 1977, from any role in creating the housing bubble. Obviously it won\u2019t do to pin the crisis on a 1977 law, but there is such a thing as the straw that broke the camel\u2019s back; the CRA was followed by an even more intense fusillade of statutory and regulatory measures consciously designed to increase home ownership in America without making homes less expensive and valuable per se<\/em>.<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

He’s quite right, not that the powers-that-be will take away the correct lesson from the experience: What I see when I look at the origins of the financial pandemic is the story \u201cgovernment-sponsored enterprises that subsidize crazy lending practices and puppetize legislators fail.\u201d Mortgage-writing institutions did things throughout the late 1990s and early oh-ohs that […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[25,53,13],"tags":[71,426,425,99],"class_list":["post-9531","post","type-post","status-publish","format-standard","hentry","category-economics","category-politics","category-usa","tag-debt","tag-housing","tag-mortgages","tag-racism"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-2tJ","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/9531","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=9531"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/9531\/revisions"}],"predecessor-version":[{"id":9532,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/9531\/revisions\/9532"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=9531"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=9531"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=9531"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}