Sunday, December 21, 2008

Subprime mortgage godfather

Apropos of recent scrutiny of our own mortgage experimentation courtesy of the Harper Conservatives, an article in the NY Times today on how the U.S. got to its own subprime mortgage meltdown: "Bush’s Philosophy Stoked the Mortgage Bonfire." Interesting characterization of Bush's efforts from the report:
Concerned that down payments were a barrier, Mr. Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for federally insured mortgages with no money down. Republican Congressional leaders and some housing advocates balked, arguing that homeowners with no stake in their investments would be more prone to walk away, as Mr. West did. Many economic experts, including some in the White House, now share that view. (emphasis added)
All of which sounds familiar to us given the Harper Conservatives having brought the 40-year zero down mortgage to Canada along with U.S. competitors.  And closing costs, you say? Interesting.  Our guy was trying that in September.  Way late in the game and as the Globe has revealed, after people had their hair on fire about the mortgage market, behind the scenes. 

There's much more in the Times report, including the usual complaints, cronies, lax oversight, faith in the unbridled enthusiasm of the free market, preoccupation with various wars to the neglect of domestic issues, etc., all of which led to...meltdown.