The Senate Banking Committee will be conducting a hearing today called “The Housing Bubble and its Implications for the Economy,” where lawmakers will question how the housing bubble might negatively affect the US economy.
According to Reuters, the committee will also be holding hearings next week “on the growth of innovative mortgage products that have mushroomed along with the housing sector.”
“The economy has been buoyed for some time by unrealistic expectations about the appreciation of housing prices,” said Jack Reed, a Democrat from Rhode Island, who is helping sponsor the meeting. “Now that the housing market is cooling, the economy may be headed for a bumpy landing.”
“The lawmakers will hear from several chief economists like Richard Brown of the Federal Deposit Insurance Corporation, Patrick Lawler of the Office of Federal Housing Enterprise Oversight, Dave Seiders of the National Association of Homebuilders and Tom Stevens of the National Association of Realtors.”
I’m glad they are looking into the situation, but as I’ve said in the past, our politicians usually look at these situations too late. After housing prices have climbed in a market of irrational exuberance for the past five years, the bubble looks four to five times greater then the booms of the 70’s and 80’s.
What I hope, is that instead of merely discussing the matter, legislators find innovative ways to protect the public from unscrupulous lending practices. I can count too many people who had no clue what kind of loan they were getting themselves into because they had to have a house, and lenders pushed loans without giving full disclosure to the consequences of such loans.
Perhaps if our government’s new (think 4 years new) policy of pre-emption were applied to our economy, things might be different. Just a thought . . .