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To: Arthur Wildfire! March

The Best Quotes From Thomas Sowell’s “The Housing Boom And Bust.”

[Condensed, slightly reworded.]

[In] Thomas Sowell’s The Housing Boom and Bust, here are the quotes:

More than two-thirds of the mortgages in 2004 were resold to some other financial institution, including Fannie Mae and Freddie Mac. These two government-sponsored enterprises bought more than one-third of all the mortgages in the nation that were resold by the original lenders. P.3

The interest rate on a conventional 30-year mortgage was about 8 percent in 1973, 18 percent in 1981, and 6 percent in 2005. — P.6

An international study of urban areas around the world with “severely unaffordable” housing likewise found that 23 out of 26 such areas had strong “smart growth” policies. ...As a former governor of the Reserve Bank of New Zealand put it, “the affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land. — P.13

A study of housing prices across the nation concluded:

[”Growth management” artifically doubles the cost of a home in the name of “smart growth”. Here are Sowell’s specifics]

Today, a family in an American city without growth management planning can buy a very nice “middle manager’s” home with about 2,200 square feet, four bedrooms, two-and-one-half baths, and a two-car garage, for $150,000 to $200,000. In cities than have had growth-management planning for ten to fifteen years, that same home costs $300,000 to $400,000. In cities that have had it for twenty-five years or more, the same house costs from $500,000 to as much as $1.5 million. — P.14-15

Refinancing grew “ten-fold during the housing boom, rising from $26 billion in 2000 to $318 billion in 2006. As of 2006, 86 percent of all home mortgage refinances were “cash-out” refinances.” — P.23

Equity dropped. Average equity in a home, which was 86 percent of its value back in 1945, was just 55 percent of its value in 2003. — P.23

Advocates of “affordable housing” seldom — if ever — seek to remove government restrictions that have led to higher housing prices. Instead, they seek various ways of either forcing the private sector to charge lower home prices and apartment rents, or else they seek to use the taxpayers’ money to subsidize housing in one way or another. — P.35

In 2002, the George W. Bush administration urged Congress to pass the American Dream Downpayment Act, which subsidized the down payments of prospective home buyers whose incomes were below a certain level. After passage of that Act, the president also urged Congress to pass legislation permitting the Federal Housing Administration to being making zero-down-payment loans at low interest rates to low-income Americans. In 2004, Federal Housing Commissioner John Weicher said, “the White House doesn’t think those who can afford the monthly payment but have been unable to save for a down payment should be deprived from owning a home.” He added, “We do not anticipate any costs to taxpayers.” Who, if not the taxpayers, would pay for these government subsides — much less the defaults from riskier loans — was not revealed. — P.41-42

As far away as London, the distinguished British magazine The Economist in 2003 reiterated a warning it had made before, that “house prices would fall by 10% in America over the next four years,” though it acknowledged that many of its readers “reject our gloomy warnings.” In reality, American house prices fell sooner and more steeply. By 2005, The Economist repeated their warnings yet again, but more urgently: “America’s house prices have reached dangerous levels” and added: “The whole world economy is at risk.” In 2003, U.S. Secretary of the Treasury John W. Snow asked Congress to “enact legislation to create a new Federal agency to regulate and supervise” Fannie Mae and Freddie Mac, because of his concerns about the risks they were taking. Two years later, testifying before the same Congressional committee, he returned to the same theme, citing the “systematic risk”... p.45

A 2004 article in Fortune magazine also warned of housing speculation that “is rapidly losing touch with reality” and of the risks created by the growing practice of borrowing against the equity of one’s home. It warned that “there’s a real danger that a downturn in prices, or even a stall, could slam the economy, especially all-important consumer spending. Americans have used their homes like ATMs, taking out $662 billion in home-equity loans and refinancings since 2001.” — P.46

In 2005, resident scholar Peter J. Wallison of the American Enterprise Institute, a Washington think tank, warned that, if Congress did not rein in Fannie Mae and Freddie Mac, “there will be a massive default with huge losses to the taxpayers and systemic effects on the economy.” — P.46

In June 2004, in response to President Bush’s expressed concerns about the riskiness of Fannie Mae and Freddie Mac, seventy-six Democrats in the House of Representatives sent him a letter defending these government-sponsored enterprises, and against making the case that “an exclusive focus on safety and soundness is likely to come, in practice, at the expense of affordable housing.” These 76 house members included such prominent individuals as Nancy Pelosi, Barney Frank, Maxine Waters and Charles Rangel. — P.51-52

[OFHEO {Housing Oversight} turned up irregularities. Kit Bond [R] and Barney Frank [D] teamed up seeking to punish and slash the oversight agency.]

Congressional support for Fannie Mae and Freddie Mac went far beyond words. When the Office of Federal Housing Enterprise Oversight — the agency overseeing these government-sponsored enterprises — turned up irregularities in Fannie Mae’s accounting and in 2004 issued what Barron’s magazine called “a blistering 211-page report,” Republican Senator Kit Bond called for an investigation of the Office of Federal Housing Enterprise Oversight, tried to have their budget slashed, and sought to have the leadership of the regulatory agency removed. Democratic Congressman Barney Frank likewise declared: “It is clear that a leadership change at OFHEO is overdue.” — P.53

The development of lax lending standards, both by banks and by Fannie Mae and Freddie Mac standing behind the banks, came not from a lack of government regulation and oversight, but precisely as a result of government regulation and oversight, directed toward the politically popular goal of more “home ownership” through “affordable housing,” especially for low-income buyers. — P.57

By 2007, about one-fourth of all adjustable rate mortgage loans, interest only loans and payment option loans were at least 60 days late on their mortgage payments. This was more than double the rate of payment delinquencies on conventional 30-year fixed-rate mortgages. — P.63

[Housing speculators]

Like other aspects of the housing markets, foreclosures on property owned by absentee owners were “much more common among defaults in California, Nevada, Arizona, and Florida — all states with particularly rapid price appreciation that attracted speculators.” — P.64

Holman Jenkins of the Wall Street Journal called attention to “the striking fact” that much of the subprime crisis originated in particular areas in just four states. [lost page]

Professor Stanley Liebowitz of the University of Texas at Dallas put it: “From the current handwringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job.” Government was not passively inefficient. It was actively zealous in promoting risky mortgage lending practices. — P.68

Senator Christopher Dodd said: “I have a lot of questions about where the administration was over the last eight years.” Often the Bush administration had sought increased power to rein in Fannie Mae and Freddie Mac during those years, which Senator Dodd fought adamantly against granting such powers. — P.72

In the wake of the housing bust, Congressman Barney Frank and Senator Christopher Dodd, as chairmen of the House and Senate committees most involved in the housing market — and long-time promoters of the very policies that led the housing boom and bust — were all over the media, where they were treated as experts, able to explain the problems and provide solutions. — P.75

[How leftist groups like EEOC, ACORN, and the ACLU fanned the meltdown fire through legal threats over housing discrimination.]

Moreover, the process costs of fighting a discrimination charge can be enormous, whether the charge is racial discrimination or sex discrimination. The Sears department store chain, for example, spent $20 million fighting a sex discrimination case for 15 years, even though the Equal Employment Opportunity Commission that brought charges against Sears did not produce even one woman, either currently or previously employed in any of Sears’ hundreds of stores across the country, to claim that she personally had been discriminated against. — P.105

A study of housing costs, for example, found that land-use restrictions in the name of “smart-growth” policies had added costs of more than $100,000 per home in 50 metropolitan areas. In a community of just 10,000 families, that adds up to more than a billion dollars’ worth of extra housing costs loaded onto the people in such a small community, often on the basis of little more than some fashionable but unexamined phrases about “smart growth.” — P.114

More generally, what is called a “solution” in politics is often simply a patch put over problems caused by previous political “solutions,” which in turn were patches put over other political “solutions” before that. — P.123

Few things blind human beings to the actual consequences of what they are doing like a heady feeling of self-righteousness during a crusade to smite the wicked and rescue the downtrodden. — P.128

During all the previous history of the United States, when the federal government let the economy recover from downturns on its own, no depression was ever as deep or as long-lasting as the Great Depression of the 1930s. — P.134

Mortgages made under the Community Reinvestment Act were especially vulnerable during the housing downturn, to the detriment of both borrowers and lenders. For example, lending done under Community Reinvestment Act criteria, according to a quarterly report in October of 2008, constituted only 7 percent of the total mortgage lending by the Bank of America, but constituted 29 percent of its losses on mortgages. — P.66

[US housing compares well with other countries.]

For the country as a whole, however, home buyers have paid no more than the old fashioned standard of 25 percent of their incomes for housing in any year since 1985. Renters in recent years paid a somewhat higher percentage of their smaller incomes but not more than 20 percent in any year over the past several decades. Most housing in the United States unaffordable. The median-priced home in the United States as a whole is 3.6 times the median income of Americans. For Great Britain, the median-priced home is 5.5 times the median income and, in Australia and New Zealand, the ratio of home prices to income is 6.3 — P.33-34

Comments made years ago by distinguished British historian Paul Johnson remain very apt in our times:

The study of history is a powerful antidote to contemporary arrogance. It is humbling to discover how many of our glib assumptions, which to us novel and plausible, have been tested before, not once but many times and in innumerable guises; and discovered to be, at great human cost, wholly false. — P.148

5 posted on 03/04/2010 8:23:29 AM PST by Arthur Wildfire! March (Barack Hussein Obama, mmm, mmm, mmm. [Only leftist intellectuals publicly pick their noses.])
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To: Arthur Wildfire! March

ACORN’S involvement in risky loans meltdown:

At ACORN, Talbott Was A Key Leader Of An Attempt By ACORN To Storm The Chicago City Council. “And what exactly was Talbott’s work with Acorn? Talbott turns out to have been a key leader of that attempt by Acorn to storm the Chicago City Council (during a living-wage debate). While Sol Stern mentions this story in passing, the details are worth a look: On July 31, 1997, six people were arrested as 200 Acorn protesters tried to storm the Chicago City Council session. According to the Chicago Daily Herald, Acorn demonstrators pushed over the metal detector and table used to screen visitors, backed police against the doors to the council chamber, and blocked late-arriving aldermen and city staff from entering the session.” (Stanley Kurtz, “Inside Obama’s Acorn,” National Review Online,, 5/29/08)

Talbott Justified Her Actions Of Storming The Meeting. “This was not an overreaction by frustrated followers who couldn’t get into a meeting (there were plenty of protestors already in the gallery), but almost certainly a deliberate bit of what radicals call ‘direct action,’ orchestrated by Acorn’s Madeleine [sic] Talbot [sic all]. As Talbot was led away handcuffed, charged with mob action and disorderly conduct, she explicitly justified her actions in storming the meeting.” (Stanley Kurtz, “Inside Obama’s Acorn,” National Review Online,, 5/29/08)

Talbott And ACORN Staged Protests In Bank Lobbies Intent On Pushing Risky Lending Strategies. “Various ACORN chapters across the country, led by folks like Chicago’s Madeline Talbott, staged in-your-face protests in bank lobbies and filed complaints meant to hold up mergers sought by targeted banking firms. Unless the banks agreed to ACORN’s terms - which many (understandably) did. Talbott & Co. generally wanted them to ease down-payment requirements and ignore weak credit histories. And their intimidating tactics often necessitated police action, as at a ‘97 protest at Pulaski Bank & Trust in Arkansas, where activists blocked drive-through lanes.” (”The Meltdown’s ACORN,” New York Post, 9/29/08)

Talbott Bragged Of “Dragging Banks Kicking And Screaming” Into Dubious Loans. “ACORN recognized very early the opportunity presented by the Community Reinvestment Act (CRA) of 1977. … ACORN proudly touted ‘affirmative action’ lending and pressured banks to make subprime loans. Madeline Talbott, a Chicago ACORN leader, boasted of ‘dragging banks kicking and screaming’ into dubious loans.” (Mona Charen, “Guilty Party,” National Review Online,, 9/30/08)

Facts About Me and Barack
Stanley Kurtz On Obama And Madeline Talbott: “He had very close ties to Acorn and in particular to the head of Chicago Acorn. Her name was Madeline Talbot [sic all]. Madeline Talbot was an absolute pioneer of these intimidation tactics against banks, and Barack Obama was selected by Madeline Talbot when he was just sort of a wet behind the ears organizer. She recognized his abilities, and she asked him to train her personal staff. When he came back to Chicago from law school and Madeline Talbot was beginning her campaign against these banks, Barack Obama trained the leadership of organizers in Acorn in Chicago.” (Fox’s “Fox & Friends,” 9/30/08)

Talbott Hired Obama To Train Her ACORN Staff. “ACORN attracted Barack Obama in his youthful community organizing days. Madeline Talbott hired him to train her staff — the very people who would later descend on Chicago’s banks as CRA shakedown artists. The Democratic nominee later funneled money to the group through the Woods Fund, on whose board he sat, and through the Chicago Annenberg Challenge, ditto. Obama was not just sympathetic — he was an ACORN fellow traveler.” (Mona Charen, “Guilty Party,” National Review Online,, 9/30/08)

Talbott Spoke Up In Defense Of Obama After Some Claimed He Exaggerated His Accomplishments In Spearheading Asbestos Cleanup. “Some claim that Obama’s book, Dreams from My Father, exaggerates his accomplishments in spearheading an asbestos cleanup at a low-income housing project. … Speaking up in defense of Obama on the asbestos issue is Madeleine [sic] Talbot [sic all], who at the time was a leader at Chicago Acorn. Talbot, we learn, was so impressed by Obama’s organizing skills that she invited him to help train her own staff.” (Stanley Kurtz, “Inside Obama’s Acorn,” National Review Online,, 5/29/08)

“’He Got People To Vote With Their Feet’ On The Issue, Organizer Madeleine [sic] Talbot [sic all] Said. At The Time, Talbot Worked At The Social Action Group ACORN And Initially Considered Obama A Competitor. But She Became So Impressed With His Work That She Invited Him To Help Train Her Staff.” (Letta Tayler and Keith Herbert, “Chicago’s Streets Obama’s Teacher,” [New York] Newsday, 3/2/08)
“This Was The Woman Who First Drew Obama Into His Alliance With ACORN, And Whose Staff Obama Helped Train.” (Stanley Kurtz, “Inside Obama’s Acorn,” National Review Online,, 5/29/08)

Talbott Was Quoted Affirming ACORN’s Strong Ties To Obama. “[Obama has] ties to such radical groups as Chicago ACORN, whose lead organizer at the time, Madeline Talbott, practiced the sort of intimidating and often illegal ‘direct action’ that ACORN remains famous for. Talbott is quoted affirming that ‘Barack has proven himself among our members … we accept and respect him as a kindred spirit, a fellow organizer.’” (Stanley Kurtz, “True Believer,” National Review, 6/30/08)

Talbott On Obama: “He says things like, ‘Do you think we should do this? What role would you like to play?’ … Everybody else just puts out an e-mail and says, ‘Y’all come.’ Barack doesn’t do that.” (Peter Slevin, “For Clinton And Obama, A Common Ideological Touchstone,” The Washington Post, 3/25/07)

At Two Charities, Obama Funneled Money To ACORN. “ACORN also got funding from two charities, the Woods Fund and the Joyce Foundation, when Obama served on their boards, and from the Chicago Annenberg Challenge - the radical ‘education reform’ outfit Obama ran from ‘95 to ‘99.” (”The Meltdown’s ACORN,” New York Post, 9/29/08)
My Donations and Bundling for Barack

What Barack Says About Me
Obama: “I’ve been fighting alongside Acorn on issues you care about my entire career…” (Steven Malanga, “Organizer In Chief,” [New York] City Journal, Summer 2008)

6 posted on 03/04/2010 8:24:45 AM PST by Arthur Wildfire! March (Barack Hussein Obama, mmm, mmm, mmm. [Only leftist intellectuals publicly pick their noses.])
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