The Moral Hazard of Promoting Homeownership

One of the high -- or low, depending on which candidate one supports -- points of the final debate before the Iowa caucuses came when Michele Bachmann let loose with both barrels on Newt Gingrich for his consulting/lobbying/whatever-the-heck-he-did-to-earn-$1.6-million-from-Freddie-Mac-and-Fannie-Mae.  To which Gingrich responded in part (emphasis mine): I want to state unequivocally for everyone watching tonight:  I have never once changed my positions because of any kind of payment.... and the fact is I only chose to work with people whose values I shared and having people be able to buy a house is still a value that is important in America. Sorry, Mr. Gingrich, but I disagree. Now understand that, like virtually every American, I very much want a society where everyone who wants to buy a house can afford one.  But only if the buyer buys his house the old-fashioned way -- i.e., he (a) makes a substantial down payment (say, 20% of the purchase price) -- and (b)...(Read Full Article)