Turmoil in U.S. Credit Markets: Examining Proposals to Mitigate Foreclosures and Restore Liquidity to the Mortgage Markets

Testimony before the Senate Committee on Banking, Housing and Urban Affairs

April 10, 2008, Dean Baker

In his submitted testimony to the Senate Committee on Banking, Housing and Urban Affairs, Dean Baker argued that the situation in the housing market represents the largest economic crisis the country has faced since World War II. He went on to say that current legislation, while appropriate for some parts of the nation, will not address the needs of homeowners in bubble-inflated markets. Baker's testimony also pointed out that plans attempting to stabilize prices would prove counterproductive. His statement also included a description of his 'own-to-rent' proposal to keep homeowners in their houses by allowing them to rent from their mortgage holder at a court-appraised fair market rent.

Testimony