The U.S. Housing Crisis - Consider it on Election Day

The other day, a seemingly deranged individual emailed to complain about a blog post I did about the financial crisis in this country. In that post, I explained my views on why it's important to consider the U.S. housing crisis when you go to the polls on Election Day.

Specifically, I suggested that John McCain would be a bad choice for president, because he staunchly opposes the kind of regulation that could have prevented the housing crisis we have experienced. This person said I should be "ashamed of myself" for pointing out this view, and then went on to decry the previous actions of the Democratic Party.

For the benefit of this individual, and for everyone who plans to vote on November 4th, let me restate my views on this matter:

John McCain Will Perpetuate the Housing Crisis

Not only that, but he will also plant the seeds for a future housing crisis like the one we are experiencing right now. Unless, of course, the Congress opposes him. Back in the 1990's economists were warning about a future mortgage / housing crisis that would take place in this country, if the mortgage industry was not regulated in some way. As we painfully know, those predictions came true.

Unfortunately, things are even worse than those economists predicted. Our economy is in the worst shape it has been in since the Great Depression, and we have not yet hit the so-called "bottom."

Now, I know that many readers will shout about the evils of government regulation on corporations. But let me ask you this. Why do we have laws and regulations on personal conduct? Why do we have traffic laws? Why do we have laws against drunk driving, murder, burglary, extortion and white-collar crime?

We have laws on these things, of course, because it makes sense to do so. It protects society as a whole. So why should the government have a hands-off policy of laissez-faire when it comes to big business? Did we learn nothing from Enron and all the rest? What is wrong with sensible regulation on the way companies disclose information ... the kind of regulation that could have prevented the housing crisis that wrecked our economy?

In light of current events, I think that the people who oppose tougher regulation on lending institutions fall into one of two camps. They are either (A) employed by said lending institutions or (B) utterly insane.

The reader who emailed me -- and apparently a lot of other people in this country -- seem to think that this election is a partisan issue where the past actions of one party should make you vote for the other party by default. To these people I say, wake up and smell the economic wreckage around you.

I am speaking in purely economic terms here (because this is the Home Buying Institute after all) when I say the following:

If left unchecked, John McCain will plant the seeds for the next housing crisis in this country. He is vehemently opposed to the kind of regulation we so desperately need. Don't take my word for it ... check out his voting record for yourself. McCain himself claims that he is "fundamentally a deregulator."

Of course, in light of recent economic events, McCain now realizes that this label is going to hurt him in the election. So he is now in the process of turning on a dime to stress the importance of strong regulation. In other words, he is saying: Don't look at how I've voted for the last two decades ... just listen to what I'm saying this week.

Would McCain be the kind of president who would work to prevent another housing crisis ten years down the road? Not so much. He would be too busy planting the seeds for that crisis by allowing financial institutions to operate above the law.

Or, if I get my wish, we will wake up on Wednesday, November 5 and realize that McCain is a moot point ... because he lost the election. Only time will tell.

In closing, I leave you with some recent commentary on this subject, provided by the always-insightful Sarah Palin:



Blog topics: housing crisis - john mccain - election - regulation