Blaming the right people for housing ills

As this country examines the causes of the Great Real Estate Bubble and attempts to place blame on the shoulders of those who acted irresponsibly and led us into the Great Real Estate Collapse, it's important to keep perspective.

There were many things that contributed in small ways and large ways to the Great Real Estate Bubble. But not everything that was done was bad.

A key example comes to mind after reading the recent NY Times article about the role of the Clinton-Republican capital gains tax cut on real estate in 1997: SEE STORY HERE

Clearly, this policy change caused an increased interest in buying real estate. But that's not a bad thing.

Remember, many policy initiatives such as this one, or some revised lending policies by Fannie and Freddie were not done out of greed. These policies were DESIGNED to encourage and promote home ownership. Policy makers believed that increasing home ownership was a good thing and policies should be changed to encourage it. Increasing home ownership is NOT a bad thing. It should be encouraged. And some policies that encourage home ownership are a good thing, a very good, undeniably good thing.

The problems we're dealing with now were not caused because more people DESIRED to buy and sell real estate. They were not caused because more people could benefit tax-wise from buying and selling real estate. They were not caused because more people could make more money in real estate.

The problem with the real estate bubble was caused because people who should not be buying real estate were able to get loans they never should have gotten.

The problem came from lenders and Wall Street. Lenders created unconscionable loan products. And Wall Street found new ways to securitize them. This was the GREED factor. This was where things went wrong. Promoting increased home ownership and giving a tax break to do so is not a bad thing. Selling crazy loans that borrowers could never really pay back and re-selling them as securities is bad thing.

That was greed. That was dishonesty. That was wrong. That, my friends, was the problem.