New regulatory restrictions on real estate lending are being introduced, in a normal reaction to the problems of real estate lending brought vividly to everyone's attention during the last few years. Bank regulators have published loan-to-value regulations for various categories of real estate loans, as required by the FDIC Improvement Act of 1991.
Discussion of these rules stressed recent events and included arguments that "adopting loan-to-value percentages in a regulation would be unnecessarily rigid." As usual in American banking, the debate displayed no sense or knowledge of history. The issues are hardly new. . . .
Alex J. Pollock is a resident fellow at AEI.