What did Dodd-Frank Reform?

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In this book compiled by the Heritage Foundation (long PDF), Ed Pinto writes (p. 33),

a home-purchase loan that qualifies under QM could have a 580 FICO credit score, no down payment, and a 43 percent DTI. A loan with these characteristics acquired by Freddie in 2007 had a 42 percent failure rate under the adverse conditions that prevailed between 2007 and 2012.

In case anyone thought that having the government set credit standards for mortgages would allow one to sleep at night.

At this point, I am completely pessimistic about the future of housing finance in America. There is a powerful lobby at work to maintain policies that subsidize demand and mortgage indebtedness. And the prospects for electing someone with ideological opposition to government involvement in housing finance are quite dim.

Overall, I find the book painful to read. It shows the extent to which Dodd-Frank produced costly, counterproductive policies, based on misguided diagnoses.

7 thoughts on “What did Dodd-Frank Reform?”

  1. Ed Pinto?

    Seriously?

    Next we will be told that Peter Wallison knows something about mortgages.

    Oh, wait.

    These people have been absolutely and totally debunked for more than a decade. Their little cherry picked, non specific “facts” are absolutely worthless.

  2. http://rooseveltinstitute.org/rortybombsix-rebuttals-argument-congress-or-fannie-and-freddie-caused-crisis/

    In terms of Wallison, beware of people that say entirely different things depending on their paychecks:

    ” In the words of Peter Wallison in 2004: “In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”

    • Nobody here listens (or doesn’t) to people based on their identity or their prior positions.

      • I am not sure what your reply means.

        Wallison has clearly shown that his opinion changes not based on facts, but on who is paying him.

        • It means the individuald are irrelevant to the ideas being discussed.

  3. I read the report and since it is all the government fault then it must all be the government fault. It does not even note that the worst players in the crash were most shadow banking companies like Countrywide.

    Admittingly, Dodd-Frank will not stop the next crisis because capitalism has financial crisis.

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