Benjamin Lockwood

Back in January, the Senate briefly entertained the idea of giving a $15,000 tax credit to all new homebuyers, before reducing the credit to $8,000 and restricting eligibility to first-time homebuyers earning less than $75,000 per year. Now Senator Johnny Isakson (R-GA) has reintroduced the $15,000 proposal, without the first-time-buyer and income restrictions. Now don't get me wrong, I'm all for helping the housing market, but I have to wonder whether such a… More »

Amid discussions about whether it would be possible for banks to cheat Timothy Geithner's bank plan (by bidding on their own toxic assets with government-subsidized non-recourse loans) it's worth thinking a bit more about why that would be such a bad thing. After all, the banks that own these securities arguably have better access to the (admittedly scarce) supply of information about the assets, so given an appropriate auction structure, the assets should be more… More »

Obama announced his proposal to prop up the collapsing housing market today in Phoenix (one of the country's foreclosure capitals). Having obviously learned from the debacle of Geithner's banking plan roll-out, today's proposal was both larger ($75 billion rather than $50 billion) and more detailed than many expected. The proposal has its faults -- it is more costly than necessary and includes cram down provisions -- but I expect it to be effective, and I'm glad to… More »

Obama announced his proposal to prop up the collapsing housing market today in Phoenix (one of the country's foreclosure capitals). Having obviously learned from the debacle of Geithner's banking plan roll-out, today's proposal was both larger ($75 billion rather than $50 billion) and more detailed than many expected. The proposal has its faults -- it is more costly than necessary and includes cram down provisions -- but I expect it to be effective, and I'm glad to… More »

Today Obama is expected to announce his proposal to prop up the beleaguered housing market later today. An article in the Washington Post this morning discusses several potential components of the plan, some of which (interest rate reductions, workout incentives) are good ideas. One piece that should not be included, however, is a provision for bankruptcy cram downs. Cram downs would allow bankruptcy judges to reduce the outstanding principal on mortgages for… More »

In a WSJ op-ed, Ed Glaeser takes aim at the Republican proposal to reduce mortgage rates to 4 percent, which I advocate. He writes:... it is particularly disappointing to see Senate Minority Leader Mitch McConnell embrace "providing government-backed, 4% fixed mortgages to any credit-worthy borrower" as his alternative to the Barack Obama/Nancy Pelosi stimulus package....This massive lending program is justified as a means of boosting housing prices. But over the… More »

As the Senate turns to crafting its own version of the stimulus package, many are calling for amendments that directly target the plummeting housing market. To be sure, house prices have been inflated in recent years, so a measured decline in house prices is warranted. The problem is that house prices have already fallen to their pre-bubble levels, and economic forecasters and financial futures markets suggest that, without action, house prices will continue… More »