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Politics : Politics for Pros- moderated

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To: cirrus who wrote (279590)	11/8/2008 11:15:39 PM
From: TimF	3 Recommendations Read Replies (1) of 793755

Weren't mortgage interest deductions and zero/reduced cap gains on primary homes fixed in policy long before Carter? Neither issue was the issue Carter created, they where additional issues. Capital gains taxes where reduced before Carter, but where not near zero for almost all house sales until Clinton. In the past if you put the money back in to a house withing a short time, you could avoid taxes, but after Clinton's change you could simply ignore capital gains for tax purposes, up to about a half million dollars. Carter's contribution to the problem was the Community Reinvestment Act. The Bush administrations contribution was a change that allowed some institutions to be more leveraged. As far as Fannie and Freddie, institutions having little to do with these two They had a lot to do with inflating demand for home ownership, which had a lot to do with the increases in prices that eventually lead to something that resembles "the assumption that housing prices would never fall nationwide". are the banking regulations (or lack thereof) No "lack thereof" banks are very regulated. But some of these regulations made the problem worse. "Regulated" not only doesn't imply "safe", it doesn't even imply "safer". Which is not to say that smart regulation can't make things safer only that just adding more regulation doesn't mean you get prudent regulation. That's esp. true in terms of this particular problem because both parties where heavily in to the idea of expanding home ownership. Few people would even propose reigning in the party, and when Bush finally tried to real in part of it (but probably too little too late if it it had passed), the Democrats in congress shot it down.

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