Over at the E21, Charles W. Calomiris and Stephen H. Haber ask whether we have actually learned anything from the housing crisis. In essence, they argue that, despite surface-level “reforms”, nothing has fundamentally changed, leaving open the potential of a future subprime crisis.

Consider the recently issued rules by the Consumer Financial Protection Bureau governing “Qualifying Mortgages,” (loans that are supposed to ensure low risk to lenders and affordability for borrowers). As initially proposed, home loans could only obtain QM status if they met strict standards, such as a 20 percent downpayment and a housing-cost-to-income ratio of 28 percent. The final version of the rules, however, dropped the 20 percent downpayment and the 28 percent ratio was watered down to a total-debt-to-income ratio of 43 percent. Worse, mortgages that can be repurchased or securitized by Fannie or Freddie are exempt from these standards; they automatically count as QM loans provided they do not contain certain very high-risk features, such as negative amortization.

The implications of their analysis are ominous. Read the whole thing.

For the lessons of the crisis to be learned, we need to question the prevailing premise that “social justice” requires that everybody has an equal “access” to home ownership.