housing opinion

Fifty years ago, when someone wanted to buy a house, they had to have a down payment, and a good credit history. Two things changed. First, the Glass-Steagal Act was repealed, which barred banks from using depositors money for investments. Second, members of Congress - like Barney Frank, insisted that mortgages be made available to people who could not afford down payments, and who earned less money and could not afford payments. Contrary to an earlier comment, this did not mean minorities, it meant poor people. Frank, and others in his party, believed that poor people should also buy homes, homes that they could not afford. They pressured Fannie Mae, etc. And it was done. Soon, people were buying homes with no money, getting cash from the builders and getting mortgages higher than the house value. Speculators joined in, and help drive the rush. Banks sold packages of these loans. It was all fine as long as the house prices rose, then it collapsed. We need to go back to when you had to have a down payment to buy a house, and good credit. No, you cannot give poor people houses. They have to be able to buy them. Frank and his congressional allies were responsible, Countrywide and other institutions made those loans, but so did banks. Was it minorities who bought? Well, some, but it wasn't that they were minorities, it was that those who bought were people who did not have the money to qualify under the old system. And, there were those who were not minorities who bought, and the speculators bought under the same terms designed for poor people. So, now the middle class is forced to pay for all of this nonsense, and Frank will be re-elected because he is in a gerrymandered, bulletproof Democratic district. He has refused to answer any questions about his role in the crisis, as has Nancy Pelosi. They know, but the Press is not really interested in pursuing them. And, the President does not appear to be looking for a substitute for Glass-Steagal. The system is ready for another round. You cannot give poor people houses, and make conditions that speculators will join in. People need to be able to pay for what they want to buy.