{"id":9225,"date":"2015-06-19T06:02:50","date_gmt":"2015-06-19T11:02:50","guid":{"rendered":"http:\/\/olduvai.ca\/?p=9225"},"modified":"2015-06-19T06:02:50","modified_gmt":"2015-06-19T11:02:50","slug":"hidden-in-fannie-and-freddie","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=9225","title":{"rendered":"Hidden In Fannie and Freddie"},"content":{"rendered":"

Hidden In Fannie and Freddie<\/a><\/span><\/h3>\n

With another financial crisis fast approaching the cause of the \u201808 crash hasn\u2019t been settled. Austrians generally line up on the side of the all-powerful Fed having lowering interest rates below what the market would produce, sending capital into malinvestments: In this case, too many subdivisions of houses and other real estate. When the Fed hit the brakes in \u201806, raising its fed funds rate, housing peaked and the party was brought to an abrupt and painful end as the value of mortgage backed securities melted down.<\/p>\n

I\u2019ve given this talk plenty of times, most recently for\u00a0The Nassau Institute<\/a>\u00a0in the Bahamas.<\/p>\n

\"Screen<\/a>The visual of fed funds combined with Las Vegas land and housing prices on top of a busted subdivision aerial photo is worth a thousand words.<\/p>\n

There is another part of the story touted by Austrians such as\u00a0Tom Woods<\/a>\u00a0and\u00a0Tom DiLorenzo<\/a>\u00a0that government required banks to provide mortgages to those who couldn\u2019t afford them through the force of the Community Reinvestment Act (CRA). \u00a0Predictably, these borrowers couldn\u2019t or wouldn\u2019t pay and their mortgages turned into toxic paper that led to Wall Street\u2019s almost demise.<\/p>\n

Because of my experience in the non-bailed-out part of the banking sector, I\u2019ve always doubted the CRA-did-it thesis. CRA seemed easy for the little bank I worked for as we made a number of development and construction loans for entry-level housing and even received credit for a loan made on a building where X-rated movies and sex toys were sold. These loans were made for economic reasons with no thought to CRA.<\/p>\n

But Peter Wallison\u2019s book\u00a0Hidden In Plain Sight\u00a0<\/i><\/a>has changed my mind. Wallison is no tin foil hat wearer, being the Arthur F. Burns Fellow at the American Enterprise Institute and serving as a member of the 2010\u00a0Financial Crisis Inquiry Commission<\/a>\u00a0(FCIC).\u00a0<\/span><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Hidden In Fannie and Freddie With another financial crisis fast approaching the cause of the \u201808 crash hasn\u2019t been settled. Austrians generally line up on the side of the all-powerful Fed having lowering interest rates below what the market would produce, sending capital into malinvestments: In this case, too many subdivisions of houses and other […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2125,6492,303,305,312,6493,431,6058,2339,860],"class_list":["post-9225","post","type-post","status-publish","format-standard","hentry","category-economics","tag-austrian-economics","tag-fannie","tag-fed","tag-federal-reserve","tag-financial-crisis","tag-freddie","tag-interest-rates","tag-mises","tag-mortgages","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9225","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9225"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9225\/revisions"}],"predecessor-version":[{"id":9226,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9225\/revisions\/9226"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}