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April 21, 2014

Andrew Silow-Carroll: Passoverkill? Suggestions to make next year's seders even more culturally sensitive

Sara Israelsen Hartley: Seeking the Divine: An ancient connection in a new context

Christine M. Flowers: Priest's execution in Syria should be call to action

Courtnie Erickson: How to help kids accept the poor decisions of others

Lizette Borreli: A Glass Of Milk A Day Keeps Knee Arthritis At Bay

Lizette Borreli: 5 Health Conditions Your Breath Knows Before You Do

The Kosher Gourmet by Betty Rosbottom Coconut Walnut Bars' golden brown morsels are a beautifully balanced delectable delight

April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review August 19, 2013 / 13 Elul, 5773

From bubble to bottleneck: The unintended side effects of other government policies

By Robert J. Samuelson




http://www.JewishWorldReview.com | One of today's economic puzzles is why the Federal Reserve's low interest rates haven't spurred a stronger recovery. A partial answer lies in the beleaguered housing market, which is a crucial channel through which low rates operate. Although housing has rebounded, the revival has been muted by banks' tougher lending practices. Low interest rates don't matter if lenders won't lend or lend only to ultra-safe borrowers. Fed Chairman Ben Bernanke often complains of overly tight mortgage credit standards. But some of the toughness turns out to be the unintended side effects of other government policies designed to punish banks for the financial crisis.

Down in the housing market's trenches, the shift in credit standards has been stunning. At the bubble's height, "we had times when banks were lending if you had a birth certificate," says Maria Wells, a Florida real estate broker. Now, she says, banks are so obsessed with making safe mortgages that the approval process drags on endlessly, and lenders routinely make last-minute demands for higher down payments or more documents (proof of income, payment history). "Sometimes deals don't close," she says. "Half of our sales are all cash."

That exceeds the national average of about 30 percent, but both figures dwarf a more normal 10 percent for all-cash settlements, according to the National Association of Realtors. This is one indicator of scarce credit. Another is the higher credit scores of successful borrowers. Scores on loans backed by Fannie Mae and Freddie Mac -- the firms providing federal mortgage guarantees -- averaged about 720 (on a 300 to 850 scale) before the bubble. Now that's risen "sharply" to 760, says Harvard's Joint Center for Housing Studies. Guy Cecala, publisher of the respected newsletter Inside Mortgage Finance, reckons that at least half the population would have trouble qualifying under present credit scores.

All this has muffled housing's recovery. Although sales, prices and building are rising, they don't fully reflect pent-up demand. Construction starts on new units remain less than 1 million annually when underlying demand is 1.7 million, figures economist Mark Zandi of Moody's Analytics. Demand reflects the formation of new households (67 percent), the demolition of older structures (21 percent) and second homes (12 percent).


Superficially, the case for stronger growth has seemed airtight. Five years after the financial crisis, foreclosures have abated. Interest rates remain low. For most of the past year, they averaged about 3.5 percent on 30-year fixed-rate mortgages; now they're about 4.4 percent. Affordability is high; low rates and low home prices keep monthly payments down. And, finally, there's this: about 90 percent of new mortgages are sold to government entities (Fannie, Freddie, the Federal Housing Administration and the Dept. of Veterans Affairs). The originating lenders don't seem to bear much risk if mortgages default.

Appearances, though, are deceiving. Originating lenders (often large banks -- Bank of America, JPMorgan Chase, Citigroup, Wells Fargo) can still be forced to absorb the costs of default. After the housing bubble, Fannie and Freddie sued banks claiming the lenders should take back bad loans that reflected negligence or fraud. Banks have repurchased or negotiated settlements on $95 billion of Fannie and Freddie mortgages, according to Inside Mortgage Finance.

"On this point, the banks are right," says Laurie Goodman, an analyst at Amherst Securities and the Urban Institute, a think tank. "They feel they have residual risk [for defaults] even though they're paying Fannie and Freddie to take the risk" through fees. Defaults pose other potential costs, including damage to banks' reputation. To avoid these costs, banks have embraced a simple strategy: Lend only to super-strong borrowers, unlikely to default.

Heavily dependent on credit, housing is straining to get it. The whole sector has moved from bubble to bottleneck. Its contribution to the recovery may disappoint. First-time and minority buyers especially struggle to borrow. "We all agree that credit was way too loose [in the bubble]," says Goodman. "But credit is way, way tighter now than it was in 2002 and 2003" before the bubble, she says.

Maybe falling unemployment and rising house prices -- both credit pluses -- will ease the anti-lending bias. Maybe regulatory changes involving Fannie and Freddie will encourage lending. Or maybe not.

Public policy faces a contradiction. There's a powerful impulse to blame banks for the financial crisis and to "make them pay." Just recently, the Obama administration sued Bank of America, charging it with fraud in selling an $850 million worth of mortgage-backed bonds. (The bank denied the charge.) These attacks remind banks of mortgage lending's perils. "Every time a lender is publicly sued or flogged," says Cecala, "makes it less likely they'll loosen standards." What's politically convenient is economically damaging. Which do we favor?

Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.

Comment on Robert J. Samuelson's column by clicking here.



08/15/13: A better, brighter America? We're defining prosperity down
08/12/13: The news isn't free
08/08/13: ObamaCare has already caused health care cost growth to slow?
08/25/11: Inflation is the answer?
08/09/11: The big danger is Europe
07/27/11: Why are we in this debt fix? It's the elderly, stupid
07/25/11: Postwar Pillars Of Capitalism Are Crumbling
01/27/11: How Obama's speech muddied the budget debate
01/24/11: China's new world order demands stronger U.S. response
10/18/10: What's left in the Fed's toolbox?
10/11/10: The Age of Austerity
09/20/10: The ritual of sound-bite economics
08/09/10: America's parent trap
08/02/10: Hope for our energy future
07/29/10: Why CEOs aren't hiring
06/07/10: Duped by success
05/31/10: Why Obama's poverty rate measure misleads
05/17/10: Wake up, America
03/22/10: The maestro's misconceptions
03/15/10: Obama's illusions of cost-control
01/14/10: In the aftermath of the Great Recession
12/29/09: Democracy's demolition derby
11/30/09: Bipartisan threats against the institution that saved America from depression
09/14/09: Give It to Us Straight
09/07/09: Bad Future for Jobs?
08/24/09: A Rail Boondoggle, Moving at High
08/10/09: Championing the Status Quo
08/03/09: We'll remain in denial, prisoners of wishful thinking, until the fateful reckoning arrives in the unimagined future
07/27/09: Obama's misleading medicine
07/13/09: Americans' self-indulgence hurts us
07/06/09: Economists out to lunch
06/29/09: Panics ‘R’ Us!
06/08/09: Flirting with deflation or inflation? Now the economy might be at risk of both
05/25/09: A ‘crisis’ America needs
05/18/09: Will somebody finally say that Obama is irresponsibly mortgaging our future?
05/04/09: The Bias Against Oil And Gas
04/27/09: Environmentalists maximize the dangers of global warming while pretending we can conquer it at virtually no cost
04/20/09: Our Depression Obsession
03/23/09: Geithner treads a line between financial paralysis and populist resentment
03/23/09: American Capitalism Besieged
01/06/09: The limits of pump priming
12/29/08: Humbled By Our Ignorance
07/31/08: The homeownership obsession
07/24/08: A Depression? Hardly
07/17/08: Why isn't globalization making the interconnected world more stable?



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