Here’s a look at some other editorials published in newspapers across New England:
They should have left it alone
The American dream of homeownership was never intended for everyone. One hundred years ago, fewer than half of U.S. households owned their home. By 1980, the ownership rate was up to 65.6 percent, and for the next 17 years, it fluctuated between 63.8 percent and 65.7 percent.
That was all the market would bear because not everyone has the wherewithal to own a home, and banks refused to write mortgages unless applicants put up a substantial down payment and proved their ability to repay. While banks operated under sensible rules, delinquency and foreclosure rates were confined to low, narrow ranges: 3.1 percent to 5.8 percent for delinquencies and 0.33 percent to 3.7 percent for foreclosures, according to census data.
Late in the Clinton administration, however, then-Sen. Chris Dodd, D-Conn., and then-Rep. Barney Frank, D-Mass., fronted a conspiracy by Fannie Mae, Freddie Mac, the Department of Housing and Urban Development and the Office of Management and Budget to exploit Jimmy Carter’s Community Development Act. Under the threat of civil litigation and criminal charges, lenders were forced to meet mortgage quotas, the untenable risks they were taking be damned.
By 2004, the U.S. ownership rate soared to 69 percent. Markets were awash with subprime loans, bundled as mortgage-backed securities and sold primarily to Fannie and Freddie. Meanwhile, Sen. Dodd and Rep. Frank thwarted Bush administration efforts to reform Fannie and Freddie in a belated effort to deflate the bubble slowly.
Once the economy began to tank, however, delinquency and foreclosure rates skyrocketed, peaking in 2010 at 11 percent and 4 percent, respectively. In the last six years, millions of Americans have lost their homes to foreclosure, and tens of millions now owe more on their mortgages than their homes are worth. After the financial crisis, Congress assigned then-Sen. Dodd and Rep. Frank, as heads of the Senate and House banking committees, to write sweeping banking-system reforms. The new rules are in line with those that were in effect before Dodd, Frank and other government officials tried in vain to override basic economic laws through market manipulation and political corruption.