Did The Federal Government Cause The Subprime Meltdown?
March 16, 2012

Though the recovery seems to be speeding up, the U.S. economy remains weak, and the country has a long way to go before returning to full employment. One of the major forces holding back economic growth is the persistently-weak housing market, which continues to be the subject of intense debate. According to a GOP narrative that just won’t die, the economic crisis was brought on largely by the government—specifically, by laws that fueled the subprime boom by encouraging home ownership among low-income populations.

Romney Won the Debate...In a Way That Inspired No Confidence
January 27, 2012

This wasn’t the most exciting debate of the campaign. But it was the debate that best illustrated the underlying dynamic: Romney’s going to win, but he’ll be one of the most flawed candidates either party has nominated in recent memory.  To see this, look no further than last night’s installment of the recurring Freddie Mac dustup. Gingrich opened by lazily accusing Romney of investing in Freddie; Romney effortlessly parried the charge, explaining that he’d only invested in a mutual fund that bought shares in the company.

Grading Obama's Home Work
October 26, 2011

Forty-eight hours later, what should we think about the administration's announcement of more help for people with underwater mortgages? To be honest, I'm still not sure. And that's partly because even the experts I trust seem to disagree. Just to review, the Obama Administration’s record on helping distressed homeowners is pretty shoddy, as even the Obama himself now admits. He came into office promising relief for homeowners with mortgages they could no longer afford, but his policies delivered very little of it.

August 10, 2011

 -- A short history of iceberg towing schemes. -- Stimulus from Fannie and Freddy. -- Al Franken reminds everyone about his proposal to reform the rating agencies. -- A proposal to eliminate the debt ceiling.         -- It may not be a “grand strategy,” but Daron Acemoglu has some good ideas about how to promote growth

Who Will Dissent From The Dissenters?
December 20, 2010

Joe Nocera takes apart the Republican narrative of the financial crisis: The F.C.I.C. commissioner who has complained loudest about Fannie and Freddie is Peter Wallison, a former Reagan-era Treasury official who for the last two decades or so has been a fellow at the conservative American Enterprise Institute. Long before it was popular to criticize Fannie and Freddie, they were Mr. Wallison’s bugaboo.

The Conservative Case Against Privatizing Fannie
November 09, 2010

Right-of-center economics professor Ed Glaeser argues against privatizing Fannie and Freddie: Fannie and Freddie are the rare exceptions where the taxpayer is safer with them in government hands rather than private hands. Fannie Mae has been a private entity since 1968. Since then, the federal government has proven itself unable to allow let it or Freddie Mac default.

No, Barney Frank Didn't Crash The Economy
June 04, 2010

The notion that the economic crisis was caused by Barney Frank and Fannie and Freddie Mac has gained extremely broad currency on the right, but is so silly economists pay no attention to it at all. Paul Krugman has a great blog post summing up the ridiculousness of the whole notion: 1. The Community Reinvestment Act of 1977 was irrelevant to the subprime boom, which was overwhelmingly driven by loan originators not subject to the Act. 2. The housing bubble reached its point of maximum inflation in the middle years of the naughties: Robert Shiller 3.

Metro Home Price Recovery: Strong, Weak, Non-existent?
December 30, 2009

Yesterday’s release of the Case-Shiller Home Price Index has economists—and probably the Obama administration—on edge. The reason: an apparent softening of demand in October, which translated into weak home price growth across the 20 markets that the index tracks. That followed stronger, more widespread price growth in the summer months. The news has stoked fears of a “double dip” in house prices and the resulting havoc it might wreak in the mortgage market. Like the economy itself, though, what you make of U.S.

The Fed's Exit Strategy Could Be Graceful
December 18, 2009

There's been much hullabaloo over the Fed's ability to quickly remove the hundreds of billions of dollars it has pumped into the financial system after the economy recovers, but before the increased money supply sparks inflation. I and others have argued against panic, pointing to the Fed's new ability to pay interest on reserves as way to divorce money from monetary policy. And now a new study from New York Fed economists Morten Bech and Elizabeth Klee gives some quantitative support for this view: ...the results in this paper suggest that a graceful exit is indeed possible.

Worth Reading
October 19, 2009

Plenty more insider-trading charges could be coming. Dubner's response to Superfreakonomics criticism. Bernanke: China should spend more on healthcare. Fannie and Freddie are worth zilch. Charles Calomiris and Allan Meltzer on what to do about bank size. The booming underground sperm donation market.