2007: Austan Goolsbee on the mortgage industry.. Hoocoodanoed?

[Fumesucker]

In case you don't happen know, Austan Goolsbee is President Obama's latest head of the White House Council of Economic Advisors..

I'm starting to think we're playing economic Russian Roulette with a semi-automatic..

http://washingtonindependent.com/97243/hindsight-on-risky-mortgage-products

he mortgage market has become more perfect, not more irresponsible. People tend to make good decisions about their own economic prospects. As Professor Rosen said in an interview, “Our findings suggest that people make sensible housing decisions in that the size of house they buy today relates to their future income, not just their current income and that the innovations in mortgages over 30 years gave many people the opportunity to own a home that they would not have otherwise had, just because they didn’t have enough assets in the bank at the moment they needed the house.”

Of course, in hindsight, this looks like a crazy thing to say, and the New York Times column reads like one giant face-palm. By 2007, the subprime bubble had already started to burst, with tens of thousands more homeowners each month undergoing foreclosure than expected. And the crisis did not cede, only growing worse as unemployment tracked up nationwide. The rate of foreclosure has accelerated through this year, when an estimated 1 million families might lose their homes. The Center for Responsible Lending, cited in Goolsbee’s piece, estimates that the housing bust has cost communities of color a generation of gains in wealth.