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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: C.K. Houston who wrote (68)7/5/2001 1:34:30 AM
From: The Duke of URL©Read Replies (2) of 306849
 
1981: Tax Reform Act provided powerful tax incentives for real-estate investment. Helped create a “boom” in real estate and contributed to over-building. Deregulation of Savings & Loan Associations starts here. [Deregulation of S&L’s was a BIG MISTAKE!!]

It wasn't just deregulation, it was deregulation while maintaining deposit insurance. This put the government in the business of real estate development. And it put the owners of s and ls in business with free money, at the taxpayers expense of course.

Of course it goes without saying that the owners of the s and ls kicked back a lot of money to our august legislators.

All was sweetness and light until the government began to run out of money for two reasons:

A lot of these deals would not be productive for 10 years, so, no addition to the income tax base---tax loss.

and two, this an other bullshit programs that the congress came up with cost money. This created a huge budget deficit.

Hence, the tax benefits of real estate had to be revoked. This, of course, caused unanticipated and major economic damage because it wiped out the good people and deals with the bad.

This is the same thing that happened in 1929. That's why the regulations were there in the first place.

JUST LIKE THE REGULATIONS THAT PREVENTED BANKS FROM BEING STOCK BROKERS-- same reasoning.
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