Secretary of Treasury Henry M. Paulson Jr. Delivers Remarks On the Current Housing and Mortgage Market Developments

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Secretary of Treasury Henry M. Paulson Jr. Delivers Remarks On the Current Housing and Mortgage Market Developments

SECRETARY PAULSON DELIVERS REMARKS ON THE CURRENT HOUSING AND MORTGAGE MARKET DEVELOPMENTS, AS RELEASED BY THE DEPARTMENT OF THE TREASURY

OCTOBER 16, 2007

SPEAKER: SECRETARY OF TREASURY HENRY M. PAULSON JR.

[*] PAULSON: Good morning. As students of law, business and public policy, you have an interest in real life case studies that combine financial markets and policy issues. Current developments in the housing and mortgage markets provide such an example. I will spend my time this morning reviewing the current state of the housing and mortgage markets, the implications for our capital markets and economy, and the role government and the private sector should play as we go forward.

The ongoing housing correction is not ending as quickly as it might have appeared late last year.

And it now looks like it will continue to adversely impact our economy, our capital markets, and many homeowners for some time yet. Even so, I believe we have a healthy, diversified economy that will continue to grow.

The housing correction has its roots in an eight-year period of exceptional home price appreciation which was fueled by an increased demand for, and an abundant supply of easy credit. Speculation also played a significant role, as the share of buying activity by investors or individuals buying second homes more than doubled from 2000 to 2005. Homebuilders r...

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