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75 even this however is heavily debated as alan

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Unformatted text preview: 75 Even this, however, is heavily debated. As Alan Greenspan notes in a speech to the Conference on Housing, Mortgage Finance, and the Macroeconomy, Federal Reserve Bank of Atlanta, Atlanta, Georgia, dedicated to the theme of Government-sponsored enterprises (http://www.federalreserve.gov/boarddocs/speeches/2005/20050519/): “Some observers have suggested that the availability of fixed-rate mortgages is tied to the size of GSE portfolios. We see little empirical support for this notion. For example, we have found no evidence that fixed-rate mortgages were difficult to obtain during the early 1990s, when GSE portfolios were small. Indeed, the share of fixed-rate mortgage originations averaged slightly less than 80 percent in 1992, when GSE portfolios were small, and averaged 66 percent in 2004, when GSE portfolios were large. Clearly, these data do not support the proposition that the size of the GSEs' portfolios positively contributes to the availability or popularity of fixed-rate mortgages. It is, of course, mortgage securitization, and not GSE portfolios, that is the more likely reason for the continued market support for the popular thirty-year fixed-rate mortgage.” 76 Raphael Bostic and Stuart Gabriel analyzed census tract averages of GSE purchase activity and housing outcomes for census tracts with median incomes at the boundaries of those specified in the GSE housing goals and those specified in the 1977 Community Reinvestment Act. An intensive analysis of California census tracts found a positive association between GSE activity and housing market conditions, homeownership rates, and vacancies, but the association is generally not statistically meaningful. (Bostic, Raphael W., and Stuart A. Gabriel. 2006. “Do the GSEs Matter to Low-Income Housing Markets? An Assessment of the Effects of the GSE Loan Purchase Goals on California Housing Outcomes.” Journal of Urban Economics 59, no. 3: 458–75.) 77 Jack Favilukis, Sydney Ludvigson, and Stijn Van Nieuwerburgh (2010), “The Macroeconomic Effects of Housing Wealth, Housing Finance, and Limited Risk Sharing in General Equilibrium,", Working Paper New York University, and Edward L. Glaeser, with Joshua Gottlieb and Joseph Gyourko (2010), “ Can Cheap Credit Explain the Housing Boom ” , Working Paper Harvard University. 78 The analogy of fighting oil fires with respect to the financial crisis derives from comments made by Nobel prize winning economist Myron Scholes at a NYU Stern School conference in March 2009 for the School’s launch of its first book on the crisis, Restoring Financial Stability: How to Repair a Failed System . The Red Adair/Fred Astaire comment is taken from an exchange between Myron and John Gapper, the Financial Time’s Chief Business Commentator, at that time....
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