Republican candidate for presidential nomination, Rick Perry, has gone after the Federal Reserve with strong words, but a new study shows that Texas has disproportionately benefited from the Fed’s easy money policies.
Some other things have helped Texas as well the past few years. Because the state has few land use regulations, housing prices did not explode like they did in coastal California and hence people weren’t pushed into risky mortgages. As the housing boom crashed, prices declined more moderately in Texas.
Also, Texas regulated mortgages after the 1980s home savings and loan debacle.
From the Washington Post: One theory is that Texas’ banking system was in better shape because of regulations put in place after the savings and loan crisis in the 1980s. Regulations on mortgage finance and lack of zoning restrictions also meant Texas didn’t really suffer through a housing bubble. The authors note that Fed policy stimulates growth through several channels — including the “bank loan channel” and the “asset prices and wealth channel.” A healthy banking sector meant that these channels “remained relatively unblocked” in Texas.