Page 225 - TrumpsEconEra_Flat

Trump’s Economic Era

In October of 2002, President Bush stated, “We
can put light where there’s darkness, and hope where
there’s despondency in this country. And part of it is
working together as a nation to encourage folks to own
their home.” On December 16, 2003, he signed the
American Dream Down Payment Act. This act doubled
the funds for housing counseling services, made it
easier for potential
buyers to shop around
President Bush pushed and compare prices
hard to expand home and simplified forms.
ownership, especially
among minority groups. These policies
did not initially cause
problems, but they
began adding fuel to the fire in 2007. When millions of
homeowners defaulted on their mortgages in 2007 and
2008, Fan and Fred lost billions. Thus, they
relinquished their quasi-government status and reverted
to complete government control in 2008. Presently, Fan
and Fred own most mortgages in America.

With only a 3 percent down payment, a modest
decline in home prices puts new home buyers
underwater, meaning they owed more on their house
than what the house was worth. Deflation in home
prices trapped homeowners when they needed to
relocate, or could no longer make their mortgage
payments. A lack of equity forced them to sell at a loss
or default.

EXCESSIVE LEVERAGE
Because the government forced banks to invest in
risky loans, banks were eager to increase their profits in
the derivatives market. According to one of the world’s

-224-