Here is one article. There are other more detailed pieces that I can't find right now. But I should be able to find more over the weekend.
Things Everyone In Chicago Knows
Which happen not to be true.
June 3, 2010, 4:35 am
114 Comments
It was deeply depressing to see Raguram Rajan write this:
The tsunami of money directed by a US Congress, worried about growing income inequality, towards expanding low income housing, joined with the flood of foreign capital inflows to remove any discipline on home loans.
That’s a claim that has been refuted over and over again. But what happens, I believe, is that in Chicago they don’t listen at all to what the unbelievers say and write; and so the fact that those libruls in Congress caused the bubble is just part of what everyone knows, even though it’s not true.
Just to repeat the basic facts here:
1. The Community Reinvestment Act of 1977 was irrelevant to the subprime boom, which was overwhelmingly driven by loan originators not subject to the Act.
2. The housing bubble reached its point of maximum inflation in the middle years of the naughties:
 Robert Shiller
3. During those same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of securitization:
 FCIC
while securitization by private players surged:
 FCIC
Of course, I imagine that this post, like everything else, will fail to penetrate the cone of silence. It’s convenient to believe that somehow, this is all Barney Frank’s fault; and so that belief will continue.
krugman.blogs.nytimes.com |
