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This article was published 3 year(s) and 7 month(s) ago

Letter: Deregulation drove up housing costs

The Editors

November 19, 2021 by The Editors

To the editor:

I am writing in response to the longish letter (not read in its entirety) from Richard Eramian (The Item, Nov. 19) which includes, early on, the statement “the central fact that taxes and regulations have quadrupled the cost of housing.”   

That statement, incorrect in my view, should not be labeled “central fact” — it is simply the writer’s opinion. In the past 20 years, the single-largest contributor to increased housing costs has, in fact, been deregulation — the repeal of the Smoot-Hawley Act.  

That law was passed as a corrective to irresponsible and unregulated banking investment decisions, which led to the Great Depression of the 1930s. It is perhaps an oversimplification, but Smoot-Hawley, for more than 70 years, effectively prevented banks from dabbling in the stock market.  

Its repeal allowed them to repackage mortgages as marketable investment vehicles, at the same time as down-payment requirements bottomed out at zero, taking less than 10 years to become a crisis.

The result was the Great Recession of 2008, which was partially countermanded by successful new banking regulations, co-sponsored by Massachusetts’ own Barney Frank — my candidate for brightest member of Congress in my lifetime — also many other folks’ choice as the arch-liberal to be most hated.  

Contrary to Mr. Eramian’s statement of “fact,” my opinion is that the single-greatest (certainly not only) contribution to escalating housing costs has been government deregulation.  

Even greater cost increases have been diminished by thoughtful regulations, which deter banks from inappropriately granting mortgage debt, and its derivative investment vehicles.

Is it inappropriate for me to thank Mr. Eramian for choosing not to vote? 

Ed Myskowski
Lynnfield

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