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).

john a. powell is an internationally recognized expert in the areas of civil rights and civil liberties and a wide range of issues including race, structural racism, ethnicity, housing, poverty, and democracy. He is the executive director of the Haas Institute for a Fair and Inclusive Society. He is a professor of law and of African American studies and ethnic studies at the University of California–Berkeley, and holds the Robert D. Haas Chancellor’s Chair in Equity and Inclusion.
Jason Reece is director of research at The Kirwan Institute for the Study of Race & Ethnicity at the Moritz College of Law and lecturer in city & regional planning at the Knowlton School of Architecture at The Ohio State University.


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  2. Now, going into 2010, it’s hard to imagine that it’s only been just over a year since the economic impact of our nation’s housing crisis became clear to many Americans, producing a series of drastic economic aftershocks that shook the domestic and global economies. Spy PhoneTroubled Asset Relief Program, Fannie Mae and Freddie Mac, CRA, Bear Stearns, subprime loans, and mortgage securities dominated the news, the final months of the presidential campaign and went from obscure topics to dinner table conversation.

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