#159-160 Fall/Winter 2009-10

The Housing Crisis: How Did We Get Here? Where Do We Go?

In early October 2008, The Kirwan Institute hosted a national summit on subprime lending, foreclosure, and race. We didn't know it when we were planning the event, but a series of unfolding economic events spurred by our nation's housing crisis would have our government contemplating a $700 billion financial sector bailout on the eve of our convening.

Securitization and deregulation, growth of the global economy, concentration of subprime loans, views of homeownership, perception of homes as a source of profit as opposed to long-term investment, predatory lending, discrimination, and risk-taking all contributed to the crisis. Immergluck, Katz, and Andrews provide a multi-faceted explanation of the meltdown (with each taking a slightly different approach to analyze the crisis) that illustrates its complexity. The housing crisis is not just the result of a single bad actor or a series of bad actors, but represents the byproduct of systemic changes in our financial system and the global economy. While systems changed, our regulatory approaches to assuring fair housing did not. This mismatch helps us understand why regulations like the Community Reinvestment Act (and other laws and regulations) were not sufficient in a lending environment that had gone through profound changes. How could even basic regulations like CRA stem the crisis, when most lenders spreading subprime loans throughout marginalized communities were not subject to regulation by the law?

In this global economic age, our economic systems are complex and dynamic, and as such, solutions to the current housing crisis need to respect this. We must be diligent to create policy responses that can quickly adapt and adjust to the ever changing global economy. Our complex systems also mandate a continued assertive role for government in maintaining stability and assuring sustainability in housing and lending (as well as other facets of our economy and society).

OTHER ARTICLES IN THIS ISSUE

  • Slipping Away

    February 12, 2010

    As a wave of HUD mortgages expires in the next four years, an already dwindling supply of affordable units may nosedive with owners making windfall profits -- unless the right mix of federal legislation and local organizing can save the day.

  • HUD’s New Team

    February 12, 2010

    The U.S. Department of Housing and Urban Development under the Obama administration is equipped with an impressive list of housing experts at the top.

  • Heard and Not Forgotten

    February 12, 2010

    What started out as a "weird art project" in Toronto is providing aural illustrations into a northern New Jersey community's past, and, organizers hope, laying the groundwork for the future.