At a conference today for the National Association of Real Estate Editors, Congressman Barney Frank (D-MA) reiterated his view that "homeownership for all as a goal is flawed." And that as there are many out there who would be "more appropriately renting", that "rent reform" will also be a priority with the administration.
The problem of buyers acquiring property with zero down is a major focus -- Frank's stated goal was to eliminate 100% mortgage financing altogether and require minimum investments of 5%. He also wants to severely restrict sub-prime funding, not as it currently is curbed by the simple fact that lenders are out of business and no one wants to buy those loans, but through legislation.
Paul Kanjorsky (D -PA) also indicated that he felt rent reform was going to replace subprime lending as a major concern. He feels that current efforts have stabilized the real estate and mortgage markets somewhat but that they are temporary band-aids and more complete reform is required to support a long-term recovery. Mr. Kanjorsky claimed that there are viable institutions out there which deserve support as long as they are capable of servicing borrowers and cited Fannie and Freddie as examples.
Both Frank and Kanjorsky advanced the idea that institutions should not be allowed to get so large that Americans cannot let them go under. Punitive measures were supported, including the immediate dissolution of shareholder equity and the firing of the CEO of the most egregious offenders.
However, Kandorsky indicated while we may not repeat this exact crisis, it's impossible to stop the next one-it will just be different. He asserted that it's part of America's history that we undergo some sort of financial crisis every 25 years or so. And, he claimed, "It's the nature of capitalism to fight containment."
