Friday, February 6, 2015

Obama's housing recovery plan could bring another Great Recession

When President Obama announced two weeks ago that he was going to lower the insurance premium for risky FHA mortgages,  the country reacted with a yawn. Americans seemed to be asking: What’s that got to do with me?

A whole lot, it turns out.

The American people might snap to attention if they understood that the president is proposing to go back to the same policies that brought on the 2008 financial crisis.

That’s the problem we face today. The American people — after being told for years that the financial crisis was caused by Wall Street greed and the failure to regulate banks and other financial institutions — simply do not know that it was government housing policy that caused the financial calamity that shook the nation seven years ago.

The stark facts are these: in 2008, there were 55 million mortgages in the U.S., of which 31 million were subprime or otherwise risky because they had low or no downpayments and other bad features.

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