Bring Back the '80s

The article suggests that the aggresive lending practices that are part of the cause of the housing bubble could have a detrimental effect on banks, like in the 80s. I doubt that we will have rampant bank failures when the current boom ends, since most banks, it seems, sell their mortgages to Freddie, Fannnie and others. On the other hand, it seems very possible that Freddie and Fannie could fail, or require a taxpayer funded restructuring. Also, buyers of Fannie and Freddie securities, such as hedge funds, mutual funds, pension funds and overseas investors, could get hurt.

As long as were on the subject of the '80s, remember when WHTG 106.3 was the best radio station at the shore?

"The office of Federal Housing Enterprise Oversight reported that the average U.S. home price rose by almost 11 percent in 2004, up from 7 percent in both 2002 and 2003; and that the number of boom markets increased by 72 percent last year to now include 55 metropolitan areas. These housing boom markets included 21 cities in California, 18 in the Northeast and 11 in Florida.

A similar occurrence happened during the market boom and bust of the late 1980s, which followed the collapse of more than 750 savings-and-loans and cost taxpayers millions of dollars. The failure of the banks was blamed by many in part on their aggressive real estate lending practices that led to foreclosures across the country."

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