If I Were Mortgage Czar
8th September 2008
Arnold Kling has the solution.
The demise of the savings and loans produced the rise of Fannie Mae and Freddie Mac. One can argue that Fannie and Freddie were more efficient and better hedged against interest-rate volatility than the savings and loans. If Fannie and Freddie had stuck firmly to the 20 percent downpayment mortgage, we would not need a mortgage czar today. But they didn’t stick to it, and we are where we are.
So the answer, as in so many areas of life, is to be conservative. Funny how well that works.