In this issue

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
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 Sept. 30, 2008 / 30 Elul 5768

High hopes led to this crisis

By Clarence Page

Printer Friendly Version
Email this article

http://www.JewishWorldReview.com | It is fashionable in some circles to fume and fuss that the current financial crisis was born out of greed. It wasn't. Quite the opposite, this mess was born out of the best of intentions, which is dangerous enough in Washington. The greed came later.

The mess began as a neat idea, the well-intentioned goal of helping more working-class renters to become homeowners.

Many did. The numbers of minority and other first-time homeowners climbed. The housing market prospered. Congress, the lending industry, the Clinton administration and the Bush administration each took credit for the boom. Almost everyone tried to ignore the growing bubble beneath the housing boom.

As more and more money chased fewer and fewer qualified home buyers, the needy were elbowed aside by the greedy. Thousands of buyers were lured by loan officers into no-money-down, interest-only and other tantalizing loans, often for higher amounts than the applicants could afford.

Housing prices soared. The bubble now has burst. With mortgage foreclosures mounting and big banks and thrifts going bust, like the record-breaking Washington Mutual last week, the finger pointing begins as to who let it happen.

The answer: Just about everybody who could have put the brakes on failed to do it, often with the best of intentions.

In 1999, for example, Fannie Mae Corp., the nation's biggest underwriter of home mortgages, announced it was easing the credit requirements on loans that it would purchase from banks and other lenders. The purpose was to help increase home ownership among minorities and others whose incomes, credit ratings and savings were too low for them to qualify for conventional loans.

Their alternative was "subprime" loans, which could charge three or four percentage points higher than conventional rates. Faced with those whopper rates, many prospective buyers figured they might as well keep renting.

Fannie Mae's pilot program, announced by its chairman, Franklin D. Raines, allowed qualified buyers to pay as little as one additional percentage point for a conventional 30-year fixed rate mortgage. After two years, that extra point would be dropped if the borrower had kept up his or her monthly payments.

Of course, Fannie Mae was taking on more risk. But Fannie Mae also was being pressured by the Clinton administration to help working-class home buyers, by its stockholders to grow more profits, and by banks, thrifts and mortgage companies who wanted to make more subprime loans possible. Soon the entire lending industry was being pressured to ease up on considerations of income, credit history, down payment and closing costs in determining the creditworthiness of customers.

Everybody knew how disastrous that could be in an economic downturn. Memories of the government's savings and loan bailout in the 1980s were still fresh. "If they fail," Peter Wallison, a resident fellow at the American Enterprise Institute, was quoted as saying in a 1999 New York Times story about Fannie Mae's move, "the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry." That's what's happened.

Conservatives now point to that historical moment to place blame for today's Wall Street collapse in Clinton's lap. Yet President Bush also embraced the expansion of higher-risk home loans, as part of his national drive to expand home ownership through grants, tax credits and his 2003 call for "the entire housing industry to help at least 5.5 million minority families become homeowners by the end of this decade." They tried. Again, the president's intentions were good.

Unfortunately, today's home finance crisis now resembles the Federal Housing Administration disaster in the early 1970s. In Chicago, Detroit and other cities, blocks of boarded-up houses were left in the wake of unscrupulous lenders who exploited government-insured mortgages. Finger-pointing and overdue regulations followed that scandal, too. So did a drying up of home buying opportunities, which is the exact opposite of the program's hopes. A similar post-disaster dance of blame is shaping up in Washington now.

Public-private partnerships can work, if you remember the lessons of past intentions. First, we need regulations and oversight that remembers the sneaky side of human nature, including the inevitable temptation to make an easy buck off of someone else's good intentions.

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 Clarence Page's column by clicking here.


© 2007, TMS