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Books in Review

(Page 2 of 2)

Areas with the biggest run-up in housing prices had the farthest to fall when the bottom fell out. According to the latest National Delinquency Survey, the percentage of mortgages seriously delinquent (more than 90 days late on payments or in foreclosure) in Nevada, Florida, and California was 15.6 percent, 17.1 percent, and 10.8 percent, respectively.

Such restrictions, though, are only one factor and not everywhere an important one, as Sowell would probably acknowledge. Some places with very high delinquency rates, like Arizona, had only modest land restrictions.

Sowell's analysis has made some impact. At a June hearing in a subcommittee of the House Financial Services Committee, Rep. Ed Royce (R-CA) said, "Any member that's interested in this debate, I'd get a hold of Thomas Sowell's new book...and see the role that Congress played in helping create this crisis."

Unfortunately, it appears that few have taken Royce's advice.

Not many members of Congress seem worried about potential problems with the Federal Housing Authority. In the aftermath of the crisis, Congress turned to the FHA to help prop up the housing market. FHA loans now have a delinquency rate of more than 14 percent, the highest since records have been kept.

Worse, Barney Frank recently held a hearing in the Financial Services Committee on strengthening the Community Reinvestment Act. At issue was legislation proposed by Rep. Eddie Bernice Johnson (D-TX) that would "modernize" the CRA. "CRA has...been an extremely successful law; however, CRA needs to be updated," Johnson said. Her legislation would expand CRA's reach to credit unions, insurance companies, and mortgage lenders. Frank assured Johnson that Congress would be working to make CRA "more effective. It's a good program."

Commenting on the causes of the crisis, Sowell writes, "Many in Congress and elsewhere never really got it."

They still don't get it.