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Austan Goolsbee, former chair of President Obama’s Council of Economic Advisors, on the administration’s efforts to fix the housing market.
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But have those government efforts -- that -- slowing down the recovery there were supposed to help joining us is the former chairman of president Obama's council of economic.
-- -- schools may now professor at the University of Chicago Booth school of business.
Thanks for being with us often so what do you say -- for having that Obama advised her what do you think of all these programs -- some people in the real business world.
Think you guys.
Intended it well -- got in the way of recovery.
Well I I think that smooth sounds to me.
Who little.
Little out there I think.
They mounted that the government can do.
To fix that point eight trillion dollar market is somewhat limited and we've seen that it'll and a lot of different.
Areas but I think to say that.
Efforts taken by the government broadly defined I mean it's not all the administration there a lot of things done by the Fed and and by others.
That they actually hurt the housing market I think is pretty inaccurate -- did -- keep -- applied.
Of empty vacant foreclosed homes on the market much longer because of efforts to try to allow people who stopped paying their mortgage -- -- months and months behind to allow the stay in their holes.
-- -- -- let the market taken over and kick him out.
The well I think that's a bit of an exaggeration meaning it if you look at the efforts that were directed to prevent foreclosure.
They were usually of the form.
Getting their houses to be in debt that payments on those houses down to be some of affordable level.
And you've seen more than a million people.
But avoid foreclosure because of those efforts in -- saved.
Several thousand dollars a year more than -- mortgage million people.
I saw some of these programs -- you guys put in place.
They in in about 110 million households in America.
Only a few 100000 bothered to to sign up but -- let's look at one case the government just get out there -- from the banks eight bit billion dollars in penalties.
We're gonna review every single foreclosure case it happened at a two year period.
They're ready to spend like six billion dollars and a transfer of wealth from the banks to consultants and lawyers and ultimately -- -- this -- because that entire process of the foreclosure review was slowing it down.
In keeping these homes sitting there and let him free up why not just let the market take over let the pain happen maximum don't try to ease the pain.
And we'll get through it faster.
Would only get two different questions there one on the legal matter that that's not policy decision that was who the legal case I wasn't involved in that.
As to the question why not just for close everybody who's in trouble.
And let the market sort -- out I think you know that evidence pretty strong.
That if you live and -- house and you're making your payments but the neighbors on either side of you foreclose on their houses that -- pretty negative impact.
On the house prices.
Of everybody else in the neighborhood so you get these spillover neighborhood effects that are highly damaging yeah that's exactly why you don't want to have widespread.
Contagious foreclosures.
I think that's a great point now I think and partly like in the new -- profits -- real out that I think this is a new look -- -- but you've got patches on those that -- even an academic might have to admit I made a beard company.
It'll be -- -- -- that's coming even -- academic newly -- like you.
I think would have to admit that some of the government's policies that led up to an inflated the bubble was super low interest rates.
With encouraging banks to hand out loans to almost anybody who asked.
It was a good well intended effort and yet those government policies contributed.
To the big melt down right mean you would you would concede that true yeah I my yeah I would agree that and I worry that this repeat our economists are -- -- relying on the same kind of measures are no guy who had -- finance is just got -- FHA subsidized -- 3% down payment.
I mean are we doing it again.
So far I don't think we -- we should definitely be mindful not to live out the onion joke headline which said.
Furious nation demands new bubble to invest in to restore prosperity.
I look I'm not -- not try to who live that yeah I think economists on both sides.
Look at the rise of Fannie and Freddy's business model.
Pre crisis -- it was let's privatize the profits and socialize the losses and a very negative -- house Canada we reinvent that system.
Shame on us yet let's -- let's -- -- not happen again thanks so much for being with us professor -- -- -- -- --
