The housing boom was built on restrictions on land use in coastal California and other places, reducing the available amount of land to develop, and the enforced lowering of mortgage lending standards.
Who drove this lowering of lending standards? Was it the result of inadequate government intervention? No! It was the direct result of government regulation. Big government forced private lenders to lower their standards so that blacks and latinos could have easier access to mortgages and to housing.
In Reckless Endangerment, Gretchen Morgenson, a business reporter for The New York Times, and Joshua Rosner, author of Housing in the New Millennium, provide a smart, sharp and searing analysis of the origins of the financial crisis.
It began, they suggest, with the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, which required government-backed mortgage finance companies Fannie Mae and Freddie Mac to direct 30 per cent of their loans to low and middle-income families and another 30 per cent to units in inner cities.