U.S. Rep. Ron Paul | mortgage |
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Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:76
The conviction that stock prices will continue to provide extra cash and confidence in the economy has fueled wild consumer spending and personal debt expansion. The home refinance index between 1997 and 1999 increased 700 percent. Secondary mortgages are now offered up to 120 percent of a home’s equity, with many of these funds finding their way into the stock market. Generous credit and quasi-government agencies make these mortgage markets robust, but a correction will come when it is realized that the builders and the lenders have gotten ahead of themselves.
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A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:83
Government housing programs are no more successful than the Federal Government’s medical and education programs. In the early part of this century, government housing was virtually unheard of. Now the HUD budget commands over $30 billion each year and increases every year. Finances of mortgages through the Federal Home Loan Bank, the largest Federal Government borrower, is the key financial institution pumping in hundreds of billions of dollars of credit into the housing market, making things worse. The Federal Reserve has now started to use home mortgage securities for monetizing debt. Public housing has a reputation for being a refuge for drugs, crimes and filth, with the projects being torn down as routinely as they are built. There is every indication that this entitlement will continue to expand in size regardless of its failures. Token local control over these expenditures will do nothing to solve the problem.
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The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:29
After the NASDAQ collapsed last year, the flow of funds into real estate accelerated. The GSEs accommodated by borrowing without restraint to subsidize new mortgages, record sales and refinancing. It’s no wonder the price of houses are rising to record levels.
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The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:30
Refinancing especially helped the consumers to continue spending even in a slowing economy. It isn’t surprising for high credit-card debt to be frequently rolled into second mortgages, since interest on mortgage debt has the additional advantage of being tax-deductible. When financial conditions warrant it, leaving financial instruments (such as paper assets), and looking for hard assets (such as houses), is commonplace and is not a new phenomenon. Instead of the newly inflated money being directed toward the stock market, it now finds its way into the rapidly expanding real-estate bubble. This, too, will burst as all bubbles do. The Fed, the Congress, or even foreign investors can’t prevent the collapse of this bubble, any more than the incestuous Japanese banks were able to keep the Japanese “miracle” of the 1980s going forever.
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Free Housing Market Enhancement Act
July 16, 2002 2002 Ron Paul 70:1
Mr. Speaker, I rise to introduce the Free Housing Market Enhancement Act. This legislation restores a free market in housing by repealing special privileges for housing-related government sponsored enterprises (GSEs). These entities are the Federal National Mortgage Association (Fannie), the Federal Home Loan Mortgage Corporation (Freddie), and the National Home Loan Bank Board (HLBB). According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone.
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Free Housing Market Enhancement Act
July 16, 2002 2002 Ron Paul 70:4
Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie, Freddie, and HLBB have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.
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Free Housing Market Enhancement Act
July 16, 2002 2002 Ron Paul 70:5
However, despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policies of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.
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Fannie Mae and Freddie Mac Subsidies Distort the Housing Market
September 10, 2003 2003 Ron Paul 95:2
I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received 13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.
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Fannie Mae and Freddie Mac Subsidies Distort the Housing Market
September 10, 2003 2003 Ron Paul 95:6
Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.
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Fannie Mae and Freddie Mac Subsidies Distort the Housing Market
September 10, 2003 2003 Ron Paul 95:7
Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.
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Introducing Free Housing Market Enhancement Act
10 September 2003 2003 Ron Paul 96:1
Mr. PAUL. Mr. Speaker, I rise to introduce the Free Housing Market Enhancement Act. This legislation restores a free market in housing by repealing special privileges for the housing-related government sponsored enterprises (GSE). These entities are the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board. According to the Congressional Budget Office, the housing-related GSEs received 13.6 billion worth of indirect Federal subsidies in Fiscal Year 2000 alone.
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Introducing Free Housing Market Enhancement Act
10 September 2003 2003 Ron Paul 96:5
Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market This is because the special privileges of Fannie and Freddie have distorted the housing marketing by allowing Fannie, Freddie and the home loan bank board to attract capital they could not attract under pure market conditions. As a result, capitol is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.
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Introducing Free Housing Market Enhancement Act
10 September 2003 2003 Ron Paul 96:6
Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policies of diverting capital to other uses creates a short-term boom in housing. Like all artificially- created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.
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The Financial Services Committees “Views and Estimates for 2005”
February 26, 2004 2004 Ron Paul 7:7
Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, the financial losses suffered by the mortgage debt holders will be greater than they would have been had the government not actively encouraged over-investment in housing.
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In Support Of The Gutierrez-Paul Bill
28 April 2004 2004 Ron Paul 30:3
This new OCC authority will have far-reaching and unintended consequences. State law governing mortgage brokers, sub-prime lenders, check cashing centers, leasing companies, and even car dealers could be preempted under the new proposal. This proposal may also give national banks and their subsidiaries a competitive advantage over small mortgage companies. OCC undoubtedly will need to hire new staff. Yet the OCC still may be unable to handle the flood of new responsibilities. Unless Congress resists any expansion of OCC, it risks creating another huge, unaccountable, bureaucratic agency. Therefore, I respectfully urge all my colleagues to support Mr. Gutierriez’s legislation disapproving the OCC’s preemption regulation.
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The Coming Category 5 Financial Hurricane
September 15, 2005 2005 Ron Paul 98:4
We face a coming financial crisis. Our current account deficit is more than $600 billion annually. Our foreign debt is more than $3 trillion. Foreigners now own over $1.4 trillion of our Treasury and mortgage debt. We must borrow $3 billion from foreigners every business day to maintain our extravagant spending. Our national debt now is increasing $600 billion per year, and guess what, we print over $600 billion per year to keep the charade going. But there is a limit and I’m fearful we’re fast approaching it.
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Government Sponsored Enterprises
26 October 2005 2005 Ron Paul 108:12
Ironically, by transferring the risk of widespread mortgage defaults to the taxpayers through government subsidies and convincing investors that all is well because a “world- class” regulator is ensuring the GSEs’ soundness, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie and Freddie have distorted the housing market by allowing Fannie and Freddie to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive uses into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.
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Government Sponsored Enterprises
26 October 2005 2005 Ron Paul 108:13
Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital into housing creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have been had government policy not actively encouraged over-investment in housing.
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Amendment No. 6 Offered By Mr. Paul — Part 1
26 October 2005 2005 Ron Paul 109:1
Mr. PAUL. Mr. Chairman, I offer an amendment. The Acting CHAIRMAN. The Clerk will designate the amendment. The text of the amendment is as follows: Amendment No. 6 offered by Mr. PAUL: Page 64, after line 12, insert the following new section: SECTION 117. ELIMINATION OF AUTHORITY TO BORROW FROM TREASURY OF THE UNITED STATES. (a) FANNIE MAE. — Section 304 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1719) is amended by striking subsection (c). (b) FREDDIE MAC. — Section 306 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1455) is amended by striking subsection (c). (c) FEDERAL HOME LOAN BANKS. — Section 11 of the Federal Home Loan Bank Act (12 U.S.C. 1431) is amended by striking subsection (i). The Acting CHAIRMAN. Pursuant to House Resolution 509, the gentleman from Texas (Mr. PAUL) and the gentleman from Massachusetts (Mr. FRANK) each will control 5 minutes. The Chair recognizes the gentleman from Texas (Mr. PAUL).
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Federal Housing Finance Reform Act Of 2007
17 May 2007 2007 Ron Paul 52:12
Ironically, by transferring the risk of widespread mortgage defaults to the taxpayers through Government subsidies and convincing investors that all is well because a “world- class” regulator is ensuring the GSEs’ soundness, the Government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie and Freddie have distorted the housing market by allowing Fannie and Freddie to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive uses into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.
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Federal Housing Finance Reform Act Of 2007
17 May 2007 2007 Ron Paul 52:13
Despite the long-term damage to the economy inflicted by the Government’s interference in the housing market, the Government’s policy of diverting capital into housing creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have been had government policy not actively encouraged overinvestment in housing.
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Opening Statement Committee on Financial Services Paulson Hearing
20 June 2007 2007 Ron Paul 71:4
The shake up in the sub prime mortgage market which is now spreading, as the housing bubble deflates, has a long way to go. The same problem exists in the high-yield corporate debt market and will surely add to the economic uncertainty we now face. It’s deceptive to merely blame “abusive lending practices” for these problems.
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Statement before the Financial Services Committee
20 September 2007 2007 Ron Paul 93:1
Mr. Chairman, the situation facing us now in the mortgage industry has its roots in the Federal Reserve's inflationary monetary policy. Without addressing the roots of the current crisis, any measures undertaken to improve the situation will be doomed to fail.
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Statement before the Financial Services Committee
20 September 2007 2007 Ron Paul 93:6
Millions of Americans now find themselves stuck in a financial quandary that is not their fault. The result of manipulation of the interest rate, money supply, and mortgage markets are the recently popped housing bubble.
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Statement before the Financial Services Committee
20 September 2007 2007 Ron Paul 93:7
Further regulation of the banking sector, of mortgage brokers, mortgage lenders, or credit rating agencies will fail to improve the current situation, and will do nothing to prevent future real estate bubbles. Any proposed solutions which fail to take into account the economic intervention that laid the ground for the bubble are merely window dressing, and will not ease the suffering of millions of American homeowners. I urge my colleagues to strike at the root of the problem and address the Federal Reserve's inflationary monetary policy.
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Statement Before the Joint Economic Committee
8 November 2007 2007 Ron Paul 103:2
The collapse of the housing market has served as a catalyst for the economy's latest bust. For years the federal government has made it one of its prime aims to encourage homeownership among people who otherwise would not be able to afford homes. Various federal mortgage programs through the FHA, Fannie Mae, and Freddie Mac have distorted the normal workings of the housing market.
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Statement Before the Joint Economic Committee
8 November 2007 2007 Ron Paul 103:4
Legislation such as the Zero Downpayment Act and the misnamed American Dream Downpayment Act made it possible for people who could not afford down payments on houses to receive assistance from the federal government, or even to pay no down payment at all, courtesy of the taxpayers. The requirement of a down payment has always helped to ascertain the ability of a buyer to pay off a mortgage. It requires the buyer to show hard work and thrift, the ability to delay present consumption in order to make a larger acquisition in the future.
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Statement Before the Joint Economic Committee
8 November 2007 2007 Ron Paul 103:6
Finally, the Federal Reserve's loose monetary policy and lowering of interest rates were a major spur to the housing boom. Low interest rates influence marginal buyers, those who are sitting on the fence, and encourage them to take on a mortgage that they otherwise would not. Even when interest rates are raised, no one expects them to stay high for long, as there is always pressure from politicians and investors to keep rates low, as no one wants the cheap credit to end.
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Statement Before the Joint Economic Committee
8 November 2007 2007 Ron Paul 103:7
Thinking that interest rates will cycle from low to higher, back to low, lenders begin to offer adjustable rate mortgages, 2/28's, 3/27's, and other sophisticated mortgages that may trap many unsavvy buyers. Buyers go short, lenders go long, and many people have been burned as a result.
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“Monetary Policy and the State of the Economy”
February 26, 2008 2008 Ron Paul 8:3
By setting the federal funds rate, the rate at which banks in the Federal Reserve System loan funds to each other, the Federal Reserve inhibits the actions of market participants coming together to determine a market interest rate. The Federal Reserve and the federal government do not deign to interfere in setting the price of houses, the interest rate on mortgages, or the prices of wood and steel. The Fed’s actions in setting the federal funds rate however, because it reflects the price of money to a borrower and thus affects demand for money, affects prices throughout the economy in a manner less pervasive but just as damaging as direct price controls.
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“Monetary Policy and the State of the Economy”
February 27, 2008 2008 Ron Paul 9:3
We have already seen a plan from the administration to freeze mortgages, a plan which is alleged to be only a temporary program. As with other programs that have come through this committee, I believe we ought to learn from history and realize that “temporary” programs are almost anything but temporary. When this program expires and mortgage rates reset, we will see new calls for a rate-freeze plan, maybe for two years, maybe for five, or maybe for more.
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“Monetary Policy and the State of the Economy”
February 27, 2008 2008 Ron Paul 9:4
Some drastic proposals have called for the federal government to purchase existing mortgages and take upon itself the process of rewriting these and guaranteeing the resulting new mortgages. Aside from exposing the government to tens of billions of dollars of potentially defaulting mortgages, the burden of which will ultimately fall on the taxpayers, this type of plan would embed the federal government even deeper into the housing market and perpetuate instability. The Congress has, over the past decades, relentlessly pushed for increased rates of homeownership among people who have always been viewed by the market as poor credit risks. Various means and incentives have been used by the government, but behind all the actions of lenders has been an implicit belief in a federal bailout in the event of a crisis.
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Hearing on “The Economic Outlook”
April 2, 2008 2008 Ron Paul 18:4
Back in the 1970s, government-caused inflation reached levels high enough that the Nixon administration decided to implement wage and price controls. Placing blame on greedy speculators, unscrupulous mortgage originators, or panicky investors, is a common reaction on the part of government.
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Statement Before the Financial Services Committee, On UIGEA
April 2, 2008 2008 Ron Paul 19:3
The proper role of the federal government is not that of a nanny, protecting citizens from any and every potential negative consequence of their actions. Although I personally believe gambling to be a dumb waste of money, American citizens should be just as free to spend their money playing online poker as they should be able to buy a used car, enter into a mortgage, or invest in a hedge fund. Risk is inherent in any economic activity, and it is not for the government to determine which risky behaviors Americans may or may not engage in.
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UNTITLED
23 July 2008 2008 Ron Paul 47:2
The Federal Reserve has already invested hundreds of billions of dollars, probably close to $300 billion to bail out this industry. And of course the Fed has no money. But when we open the doors in an unlimited amount, and no restraint on what the Treasury might do in buying up these securities, we have to talk about the budget. And, of course, that is why this bill increases the national debt by $800 billion, so I guess they are expecting to buy a whole lot of mortgage securities. But that won’t solve the problem. We have to find out why this problem has existed.
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UNTITLED
23 July 2008 2008 Ron Paul 47:4
But today we have a bill before us that does a lot more than just bail out the mortgage company. I think there are some impositions in this bill that we ought to be concerned about. There is a Federal registry in here to register anybody in the broker industry. And if you work in the industry, you will be fingerprinted. Now, let me guarantee you one thing: we didn’t get into this crisis because the people who work in the mortgage industries weren’t fingerprinted. We got into this crisis because of a monetary system and a system of laws that encourage the very bubble that we are dealing with today. If we don’t deal with the creation of bubbles, you can’t solve the problem by more of the same thing. We created this problem with inflation; you can’t solve it with more inflation.
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Statement on HR 3221
July 24, 2008 2008 Ron Paul 48:3
HR 3221 also takes another troubling step toward the creation of surveillance state by creating a Nationwide Mortgage Licensing System and Registry. This federal database will contain personal information about anyone wishing to work as a “loan originator.” “Loan originator“ is defined broadly as anyone who ”takes a residential loan application; and offers or negotiates terms of a residential mortgage loan for compensation or gain.“ According to some analysts, this definition is so broad as to cover part-time clerks and real estate agents who receive even minimal compensation from ”originators.“ Additionally, this database forced on industry will be funded by fees paid to the federal banking agencies, yet another costly burden to the American taxpayers.
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HOUSING AND ECONOMIC RECOVERY ACT OF 2008
25 July 2008 2008 Ron Paul 52:3
H.R. 3221 also takes another troubling step toward the creation of surveillance state by creating a Nationwide Mortgage Licensing System and Registry. This Federal database will contain personal information about anyone wishing to work as a “loan originator.” “Loan originator” is defined broadly as anyone who “takes a residential loan application; and offers or negotiates terms of a residential mortgage loan for compensation or gain.” According to some analysts, this definition is so broad as to cover part-time clerks and real estate agents who receive even minimal compensation from “originators.” Additionally, this database forced on industry will be funded by fees paid to the Federal banking agencies, yet another costly burden to the American taxpayers.
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“The Future of Financial Services: Exploring Solutions for the Market Crisis”
September 24, 2008 2008 Ron Paul 59:3
A similar situation exists today, where many mortgage-backed securities and other similar assets are horribly overvalued. The market response would be to allow these assets to be sold on the market at whatever price they would bring. This would result in a shakeout of bad debt and a shorter, sharper correction than would otherwise occur. Unfortunately, the political will to allow banks to take the responsibility for their lending actions is at times lacking.
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“The Economic Outlook”
September 24, 2008 2008 Ron Paul 60:2
One of the perverse effects of this bailout proposal is that the worst-performing firms, and those who interjected themselves most deeply into mortgage-backed securities, credit default swaps, and special investment vehicles will be those who benefit the most from this bailout. As with the bailout of airlines in the aftermath of 9/11, those businesses who were the least efficient, least productive, and least concerned with serving consumers are those who will be rewarded for their mismanagement with a government handout, rather than the failure of their company that is proper to the market. This creates a dangerous moral hazard, as the precedent of bailing out reckless lending will lead to even more reckless lending and irresponsible behavior on the part of financial firms in the future.
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UNTITLED
10 December 2008 2008 Ron Paul 72:6
There is no real talk about it. I mean, we’ve essentially nationalized the insurance companies, the mortgage companies, the banks, and medical care is moving in that direction, and now the car companies are going to be run by a car czar from this Congress. I mean, it is such an embarrassment. It is such an insult to us who believe in freedom, who believe in sound money and who believe in limited government. It is such an insult to the whole idea of what made America great, and this is what it has come to—bailout after bailout after bailout—and nobody even calls it what it really is. It is the nationalization of our industries.
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Humphrey-Hawkins Hearing Statement
February 25, 2009 2009 Ron Paul 18:2
We find ourselves mired in the deepest economic crisis to afflict this country since the Great Depression. Yet, despite the failure of all the interventionist efforts to date to do anything to improve the economy, each week seems to bring new proposals for yet more bailouts, more funding facilities, and more of the same discredited Keynesian ideas. There are still relatively few policymakers who understand the roots of the current crisis in the Federal Reserve’s monetary policy. No one in government is willing to take the blame, instead we transfer it onto others. We blame the crisis on greedy bankers and mortgage lenders, on the Chinese for being too thrifty and providing us with capital, or on consumers who aren’t spending as much as the government thinks they should.
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LESSONS TO BE LEARNED FROM MAYOR SCARCELLA OF STAFFORD, TEXAS
June 19, 2009 2009 Ron Paul 74:2
Thanks to the absence of property taxes, Stafford residents enjoy cheaper mortgages and have more disposable income than similarly situated residents of towns with property taxes. The extra income as a result of the freedom from property taxes is particularly beneficial during today’s tough economic times.
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The 2003 Spending Orgy
03 March 2003 Texas Straight Talk 03 March 2003 verse 4 ... Cached
This practice is akin to getting a pay cut at work, then immediately buying a bigger house with a higher mortgage payment. No sensible individual would spend more when his income drops, but Congress operates without any shred of common sense or restraint at budget time. When members of Congress consider the various spending bills, the money- hundreds of billions of dollars- hardly seems real. What’s another 10 million dollars, they reason, for a pet project or favor to a lobbyist? Unlike a family facing the loss of income, Congress can raise taxes, borrow from foreign governments, or spend money newly printed by the Federal Reserve. Spending cuts are simply not considered. In fact, the federal budget grows every year without exception, and the previous year’s spending is treated only as a baseline. How long could your family survive if it spent five or ten percent more money each and every year?
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Federal Reserve Inflation Punishes Saving
21 July 2003 Texas Straight Talk 21 July 2003 verse 3 ... Cached
Throughout Greenspan’s tenure, we’ve been told that inflation is either nonexistent or very much in check. The Treasury department assures us that consumer prices, measured by the consumer price index (CPI), are under control. But inflation is much greater than the government admits. The CPI excludes housing prices, among other things. Everyone knows that housing prices have risen dramatically over the last decade in most parts of the country, with rents following closely behind. So the single biggest expense for most Americans- their mortgage or rent payment- certainly has inflated! The price of many other goods and services, including medical care and energy, also has risen substantially.
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Greenspan's Black Magic
23 February 2004 Texas Straight Talk 23 February 2004 verse 4 ... Cached
Never mind, says Mr. Greenspan. Mortgage refinancing, made wildly popular by artificially low interest rates established by the Fed, will be the saving grace of American households. They can simply borrow against their homes to finance living beyond their means, a practice encouraged by Fed policies. But what happens when home prices stop going up? What happens when families reach a point where they cannot make payments on two, three, or even more mortgages? How can the Fed chairman equate mortgage credit with real economic growth?
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Inflation- Alive and Well
08 March 2004 Texas Straight Talk 08 March 2004 verse 6 ... Cached
The Treasury department parrots the Fed line that consumer prices, as measured by the consumer price index (CPI), are under control. But even some Keynesian economists admit that CPI grossly understates true inflation. The most glaring problem is that CPI excludes housing prices, instead tracking rents. The Fed’s easy credit policies have created an artificial mortgage boom, enabling many Americans who would not have met credit standards 30 years ago to buy houses. So demand for rentals has diminished, causing rental housing prices to drop and distorting the CPI downward. However, everyone knows the cost of purchasing a home has increased dramatically in the last ten years. Home prices in many regions have more than doubled in just five years. So price inflation certainly is alive and well when to comes to the largest purchase most Americans make.
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The Federal Reserve Debt Engine
26 April 2004 Texas Straight Talk 26 April 2004 verse 5 ... Cached
In fact, he expressly cites the benefits of increased household spending made possible by mortgage refinancing. But new debt is not wealth, and it’s impossible to borrow one’s way into prosperity. Mortgage debt increased 13% last year, while consumer credit debt also increased. American households unquestionably have more debt and save less than ever before. Yet we are expected to believe that more spending and more debt are the keys to economic prosperity.
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Zero Down for the American Dream
21 June 2004 Texas Straight Talk 21 June 2004 verse 4 ... Cached
The Zero Downpayment Act, as its names suggests, creates a federal program that allows some homebuyers to obtain federally-insured mortgages without making a down payment. “Federally-insured” really means taxpayer-insured, as taxpayers like you foot the bill for defaults. So while Congress congratulates itself on yet another program that supposedly helps the poor, it is taxpayers who pay for the inevitable defaults.
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Zero Down for the American Dream
21 June 2004 Texas Straight Talk 21 June 2004 verse 5 ... Cached
Every mortgage banker knows that even a modest downpayment greatly increases the likelihood that a buyer will pay his mortgage as promised. A buyer who has consistently saved money for a down payment is by definition a better credit risk, and it’s harder to walk away from an obligation if it means losing a sizable amount of hard-earned money. A downpayment measures a buyer’s willingness and ability to make sacrifices in order to reach a goal and improve his standard of living. Banks used to recognize hard work and thrift as indicators of creditworthiness, and in a free market would demand a significant down payment for virtually all homebuyers.
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Zero Down for the American Dream
21 June 2004 Texas Straight Talk 21 June 2004 verse 6 ... Cached
But as with all federal intervention in the economy, housing welfare distorts the mortgage industry and makes ordinary Americans poorer. Banks, of course, love federal mortgage programs- after all, the risk of default is transferred to American taxpayers. The lending mortgage banks get paid whether homebuyers default or not, and what business wouldn’t love having the federal government guarantee the profitability of its ventures? Between the Federal Housing Administration, which is the largest insurer of mortgages in the world, and the government-created Fannie Mae and Freddie Mac corporations, the mortgage market is hopelessly distorted. Millions of mortgages in this country are federally insured, and the tax bill for defaults could be astronomical if the housing bubble bursts.
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Raising the Debt Limit: A Disgrace
22 November 2004 Texas Straight Talk 22 November 2004 verse 3 ... Cached
Last week Congress increased the mortgage on your future yet again, by voting to allow the federal government to borrow another $800 billion to pay its bills. This latest increase in the federal debt limit represents merely another chapter in the unprecedented explosion in federal spending that has occurred in recent years. At its present rate of spending, the federal government soon will amass $1 trillion of new debt in just one year. By contrast, the entire federal debt was only $1 trillion when President Reagan took office in 1981.
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Tax Reform is a Shell Game
07 March 2005 Texas Straight Talk 07 March 2005 verse 5 ... Cached
The president has thrown cold water on the consumption tax proposal, however, by announcing he opposes any reform that eliminates mortgage and charitable deductions. This leaves us with variations on the flat tax concept, which was savaged by the political left when advocated by the likes of House Majority Leader Dick Armey and Steve Forbes in the 1990s.
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Who Opposes Simpler, Lower Taxes?
17 October 2005 Texas Straight Talk 17 October 2005 verse 6 ... Cached
The panelists also misused the term “tax subsidy” over and over. A true subsidy is very simple: certain individuals or businesses receive taxpayer money from the government. But the panel members clearly have accepted the thoroughly leftist idea that all income belongs to the state, and therefore the state “subsidizes” you by letting you keep some of the money you earned. This is nonsense. If the government uses tax dollars to build you a house, you have received a subsidy. Taxpayers have given you something. But if you pay less in income taxes because of the mortgage interest deduction, you have not been “subsidized” by anyone. The government has not given you something; it simply has taken less. What kind of tax reform proposals can we expect from people who can’t understand the fundamental difference between a subsidy and a tax cut?
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Who Opposes Simpler, Lower Taxes?
17 October 2005 Texas Straight Talk 17 October 2005 verse 7 ... Cached
When it comes to actual tax reform legislation in Congress, don’t underestimate the lobbying influence of accountants, tax attorneys, tax preparers, IRS employees, and mortgage companies, just to name a few. Many, many groups and industries benefit from our Byzantine tax system in one way or another. They will not accept major changes to the tax code without a fight.
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Don't Blame the Market for Housing Bubble
19 March 2007 Texas Straight Talk 19 March 2007 verse 3 ... Cached
The U.S. housing market, long considered vulnerable by many economists, is now on the verge of suffering a serious collapse in many regions. Commodities guru and hedge fund manager Jim Rogers warns that real estate in expensive bubble areas will drop 40 or 50%. Mainstream media outlets like the New York Times are reporting breathlessly about the possibility of widespread defaults on subprime mortgages.
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Don't Blame the Market for Housing Bubble
19 March 2007 Texas Straight Talk 19 March 2007 verse 4 ... Cached
When the bubble finally bursts completely, millions of Americans will be looking for someone to blame. Look for Congress to hold hearings into subprime lending practices and “predatory” mortgages. We’ll hear a lot of grandstanding about how unscrupulous lenders took advantage of poor people, and how rampant speculation caused real estate markets around the country to overheat. It will be reminiscent of the Enron hearings, and the message will be explicitly or implicitly the same: free-market capitalism, left unchecked, leads to greed, fraud, and unethical if not illegal business practices.
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Don't Blame the Market for Housing Bubble
19 March 2007 Texas Straight Talk 19 March 2007 verse 5 ... Cached
But capitalism is not to blame for the housing bubble, the Federal Reserve is. Specifically, Fed intervention in the economy-- through the manipulation of interest rates and the creation of money-- caused the artificial boom in mortgage lending.
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Don't Blame the Market for Housing Bubble
19 March 2007 Texas Straight Talk 19 March 2007 verse 9 ... Cached
Fed credit also distorts mortgage lending through Fannie Mae and Freddie Mac, two government schemes created by Congress supposedly to help poor people. Fannie and Freddie enjoy an implicit guarantee of a bailout by the federal government if their loans default, and thus are insulated from market forces. This insulation spurred investors to make funds available to Fannie and Freddie that otherwise would have been invested in other securities or more productive endeavors, thereby fueling the housing boom.
mortgage
High Risk Credit
20 August 2007 Texas Straight Talk 20 August 2007 verse 3 ... Cached
As markets went on a rollercoaster ride last week, our economy is coming close to a day of reckoning for loose credit policies being followed by the Federal Reserve Bank. Simply, foreign banks we have been relying on to buy our debt are waking up to the reality of much higher default rates than predicted, and many mortgage backed securities have been reduced to “junk” ratings. Wall Street fears the possibility of tightening credit and the tightening of America’s belts. Why, they say, “if Americans spend only what they can afford, think of the ripple effects throughout the economy!” This is the cry, as the call comes for the fed to cut rates and bail out companies in trouble.
mortgage
High Risk Credit
20 August 2007 Texas Straight Talk 20 August 2007 verse 6 ... Cached
In addition to the negative reactions in financial markets, many Americans have taken on too much personal debt owing to exotic mortgage products and artificially low interest rates. Unfortunately, these families are now in the position of losing their homes in unprecedented numbers as the teaser rates expire and the real bills are coming due.
mortgage
On the Omnibus Spending Bill
23 December 2007 Texas Straight Talk 23 December 2007 verse 7 ... Cached
If this is Washington’s idea of the spirit of Christmas and charity then it is a sick joke. This holiday season we should be more concerned about the less fortunate here in our own country. People are facing the possibility of losing their homes because of a mortgage crisis brought on by inflation, businesses are being pushed into bankruptcy by a burdensome regulatory state, and the tax code makes it hard for many people to afford basics like medical care, gasoline, and educational expenses for their children.
mortgage
On Money, Inflation and Government
30 March 2008 Texas Straight Talk 30 March 2008 verse 4 ... Cached
You see, the Fed creates new money and uses it to purchase securities from banks. Flush with funds, these banks seek to put this money to use. During the Fed's expansionary period, much of this money went to home loans. Through a combination of federal government inducements to lend to risky borrowers, and the Fed's supply of easy money, the housing bubble took shape. Fannie Mae and Freddie Mac were encouraged to purchase and securitize mortgages, while investors, buoyed by implicit government backing, rushed to provide funding. Money that could have been invested in more productive, less risky sectors of the economy was thereby malinvested in subprime mortgage loans.
mortgage
Big Government Responsible for Housing Bubble
11 May 2008 Texas Straight Talk 11 May 2008 verse 2 ... Cached
The House passed two bills attempting to rehabilitate the housing and mortgage market this week. There doesn't seem to be any shortage of criticism and blame for the bad decisions, and rightly so. Lenders and banks do share much of the blame for the overheated market. Lending standards were relaxed, or even abandoned altogether, creating an exaggerated pool of homebuyers that led to ballooning home prices that many, especially real estate investors, expected to continue forever. Now that the bubble has burst, the losses are staggering.
Texas Straight Talk from 20 December 1996 to 23 June 2008 (573 editions) are included in this Concordance. Texas Straight Talk after 23 June 2008 is in blog form on Rep. Paul’s Congressional website and is not included in this Concordance.
Remember, not everything in the concordance is Ron Paul’s words. Some things he quoted, and he added some newspaper and magazine articles to the Congressional Record. Check the original speech to see.