by Mark Thoma, University of Oregon (Department of Economics)

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The Fed, Regulation, and the Housing Bubble

Posted on April 08, 2008

What were economists saying about housing bubbles and regulation of mortgage markets nearly three years ago? I just came across this post from Jim Hamilton from June 18, 2005:Another argument that's sometimes raised (for example, byKash at Angry Bear) is that some of the buyers of homes at current prices aren't going to be able to repay their loans. One could ask the obvious question here, why would banks be making unsound loans, to which there is a subtle possible answer. It has long been understood that federal deposit insurance makes the government part underwriter of some loans, because if...

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arms , fed , greenspan , housing bubble , interest rates , real estate , real estate crash , the fed