Shaky lending practices have permanent backlash

Boomtime lending practices have permanently changed the housing industry, per studies presented at a recent Federal ReserveThe central bank in control of regulating the U.S. financial and monetary system. Bank of San Francisco (FRBSF) conference.

The studies analyzed various sets of economic data to determine whether today’s flaccid economy is the result of cyclical or structural economic factors, comparing changes in the general economy with those specific to the housing industry.

Cyclical changes occur in step with changes in the business cycle, and are easily reversed. In contrast, structural changes are long-term or permanent changes to certain industries which require equally long-term economic adaptations.