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The Government's Role in the Housing Bubble

By Implode-Explode Heavy Industries

This article is brilliant -- ``The 30 year fixed rate mortgage was ultimately at the heart of the Savings and Loan crisis. Yes, yes, deregulation set the stage for the ultimate denouement--but the Savings and Loans were deregulated in such a haphazard fashion in part because they were being slowly driven into bankruptcy by their huge collection of low-interest, long-term real estate loans, in an environment where Paul Volcker had briefly driven short-term interest rates up to 20%. While fraud and abuse were certainly rampant, the enormous scope of the problem was not due to S&L officers suddenly becoming more thievish, or regulators more tolerant of thievery, but because everyone in the industry was flopping as wildly a a beached sturgeon in an attempt to keep their banks solvent atop large portfolios of low-interest loans.''

Full post as published by Mortgage Lender Implode-o-Meter on July 24, 2010 (boomark / email).