Hidden in Plain Sight

Hidden in Plain Sight

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The 2008 financial crisisa€”like the Great Depressiona€”was a world-historical event. What caused it will be debated for years, if not generations. The conventional narrative is that the financial crisis was caused by Wall Street greed and insufficient regulation of the financial system. That narrative produced the Dodd-Frank Act, the most comprehensive financial-system regulation since the New Deal. There is evidence, however, that the Dodd-Frank Act has slowed the recovery from the recession. If insufficient regulation caused the financial crisis, then the Dodd-Frank Act will never be modified or repealed; proponents will argue that doing so will cause another crisis. A competing narrative about what caused the financial crisis has received little attention. This view, which is accepted by almost all Republicans in Congress and most conservatives, contends that the crisis was caused by government housing policies. This book extensively documents this view. For example, it shows that in June 2008, before the crisis, 56 percent of all US mortgages were subprime or otherwise low-quality. Of these, 76 percent were on the books of government agencies such as Fannie Mae and Freddie Mac. When these mortgages defaulted in 2007 and 2008, they drove down housing prices and weakened banks and other mortgage holders, causing the crisis. After this book is published, no one will be able to claim that the financial crisis was caused by insufficient regulation, or defend Dodd-Frank, without coming to terms with the data this book contains.Referring to housing price declines, Mr. Lund remarked, a€œIf you told anyone that housing prices would decline 15% no less 40%, they wouldna#39;t have believed you. ... 10. 10. Bonnie Sinnock, a€œWhat Bank of America Actually Did Wrong, a€ National Mortgage News, August 28, 2014, ... of Home Mortgages, a€ Federal Reserve Bulletin (July 1996), http://www.federalreserve.gov/pubs/bulletin/1996/796lead. pdf. 8.

Title:Hidden in Plain Sight
Author:Peter Wallison
Publisher:Encounter Books - 2015-01-13


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