Question: What policies do you recommend to keep us out of the types of recessions just experienced in the United States?

Answer: There have been some excellent policy change recommendations made by eminent economists that I believe will certainly help matters in the future. As far as the new consumer protection agency promoted by the Obama administration goes, I don't know that that is at all necessary. Laxness in financial regulation may very well have been merely a consequence of the type of government environment present.

Dr. Tony Downs of the Brookings Institution says some new rules are already in place.

In July 2008 the Federal Reserve Board passed "A Final Rule Amending Home Mortgage Provisions of Regulation Z (Truth in Lending)," applicable after Oct. 1, 2009. These rules apply to subprime loans and other home mortgage loans. Much of this has to do with tougher underwriting standards and transparency where borrowers may not be able to repay their loans.

Downs also recommends that organizations that engage in banking-like activities but are not regulated by the government, the so-called "shadow banking system," be brought into the orbit of legal financial regulation.

ABOUT THE WRITER

Charles Carter is an assistant professor of real estate in the Barry Kaye College of Business at Florida Atlantic University. His areas of expertise include urban economics, mortgage-backed securities, appraisal methodology, and law and economics. E-mail questions to ccarte31@fau.edu. Please include your name, city and state.)

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