The housing crisis is widely viewed as the biggest impediment to economic recovery. Despite the expenditure of trillions of dollars in financial support from the Federal Reserve and other government agencies, housing prices continue to decline. In addition, the wide ranging regulatory overhaul of banking and mortgage practices being implemented under the Dodd-Frank Act, is viewed by many as a contributory factor in perpetuating the housing crisis. A comprehensive solution
The competing interests of the many parties involved in the housing and mortgage industry has resulted in the failure to find a comprehensive solution. At times, it seems like everyone and no one is in charge of fixing the housing crisis.
Could the solution to the housing crisis come from the same source that helped to create it? Never one to be shy about speaking out, Jamie Dimon, CEO of JPMorgan Chase, says he has a Plan To Fix The Housing Industry.
Jamie Dimon has a plan to fix the U.S. housing market: lock mortgage lenders and regulators behind closed doors until they figure it out.
“I would convene all the people involved in the business, I would close the door, I’d stay there until we resolved a bunch of these issues so we could have a more healthy mortgage market,” the 55-year-old chief executive officer of JPMorgan Chase & Co. said today.
The patchwork of U.S. and international regulatory policies governing the housing and mortgage markets are hampering recovery here and abroad, Dimon said on a conference call with analysts after the New York-based bank released fourth-quarter earnings. In the U.S., state foreclosure laws conflict with a variety of federal policies on refinancing or modifying loans to troubled borrowers, Dimon said.
Leadership is needed to overhaul the industry, including reviving the market for private-label residential mortgage bonds and reforming regulations governing mortgage repurchases and foreclosures, he said.
“You could fix all this if someone was in charge,” Dimon said, tapping on the table for emphasis. “No one is in charge.”
U.S. housing policy is set by federal, state and local agencies including the Federal Reserve, Federal Deposit Insurance Corp., Department of Housing and Urban Development, Federal Housing Finance Agency, Federal Housing Administration, Treasury Department, more than 50 state attorneys general and state bank supervisors, as well as local municipalities, which enforce foreclosure laws.
Dimon also criticized U.S. and international policies that work against the goal of sparking an economic rebound.
“We’re shooting ourselves in the foot everywhere around the world,” Dimon said. “If you looked at the inconsistencies and the counter cyclical and pro-cyclical things, it’s crazy. It’s not the way to get a recovery going.”
While U.S. lawmakers and Obama administration officials criticize banks for failing to lend to consumers, he said banks are hamstrung by strict underwriting rules. It’s no better in Europe where central bank policy is sometimes at odds with local governments, further delaying recovery there and hampering job growth, according to Dimon.
“No one is really in charge of putting these things together and realizing the negative effects it’s causing,” Dimon said. Conflicting policies will make the recovery “more painful and slower,” he said. “We all want jobs. This is not job creating.”
Jamie Dimon makes a good case for the appointment of a “Housing Czar” who could force the myriad competing interests to accept compromises that ultimately benefit everyone. Will it ever happen? With a fractured, dysfunctional and polarized Congress that can’t get two members to agree on what year it is, don’t count on.