In 2006, did Washington policymakers think that the foreclosure rate in Ohio was an aberration? Earlier this year, did they notice Matthew Yglesias' article, There Goes The Neighborhood (The Atlantic, January/February 2008), where he writes about Three Lakes, Florida?
It’s a pretty typical piece of aspirational America: two cars (or more) in every driveway. The driveways, that is, that aren’t empty. On a rainy day in November, two houses on the cul-de-sac had for sale signs out front (though it turns out more were in fact for sale). In front of another, a pile of furniture sat soaking in the downpour. According to data provided by RealtyTrac, a business that tracks foreclosures for real-estate professionals and investors, 10 of the 45 homes on the street received foreclosure filings in the third quarter of 2007 alone. (Such filings range from notices that a loan is in substantial default to notices of auction or repossession by the lender.) Three of the 10 had just been purchased—two in February, one in July. On average, the 10 homes had been owned for just 22 months before foreclosure.
Did everyone in Washington overlook Christopher B. Leinberger's quote in The Next Slum (The Atlantic, March 2008), that "Signs of physical and social disorder are spreading." He wasn't talking about the inner city. Mr. Leinberger was reporting on suburbs like "Windy Ridge, a recently built starter-home development seven miles Northwest of Charlotte, North Carolina," and "the Franklin Reserve neighborhood of Elk Grove California, south of Sacramento, (where) the houses are nicer than those at Windy Ridge -- many once sold for well over $500,000."
Why are these reports relevant to the current financial crisis? Are you confused about the whole mess? Yesterday, on NPR's Fresh Air, Terry Gross interviewed Gretchen Morgenson, a New York Times financial reporter and columnist, who won a Pulitzer Prize for her reporting on Wall Street. The interview lasts 39 minutes and is an excellent update on who, what, when, where, why, and what's probably next. Learn more and listen here.
Update: Roll Call reported this morning that the $700 billion mortgage bailout plan has been in the works for some time. Quoting White House Deputy Press Secretary Tony Fratto:
Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.In spite of what Fratto says, this effort was still late. A skeptic might wonder if the administration was hoping to avoid dealing with this until after the presidential election. Why wait until a week before the House is scheduled to adjourn for the year? Did they really think that passing a $700 billion Wall Street bailout was going to be easy?
