President Obama continued his economic housecleaning Wednesday by removing the board of the National Association of Realtors and installing Yale University economics professor Robert Shiller to lead a restructuring of the group, which was seized by the government in an unexpected move late Tuesday evening.
"We need to be honest, now and always, with the American people about house prices," the president said. "Home prices can and do go down. Damn, ain't that the truth?
Professor Shiller will bring a fresh perspective to the NAR and will help us retool the industry, which is so vital to the American economy."
Aides to the president, speaking on condition of anonymity, said the Obama administration is exploring several options to regulate the real estate sales industry.
Most plans under discussion would prohibit the payment of sales commissions in real estate transactions.
One would replace traditional salespeople with employees of a newly expanded Federal Housing Administration, who would each be required to be neutral processors of paperwork whose advice on transactions would be limited to how to fill out forms.
An alternative, lobbied for heavily behind the scenes by representatives of the legal profession, would substitute lawyers operating on a flat-fee basis for salespeople in most transactions.
A loud debate continues behind the scenes as to how, exactly, willing sellers might find willing buyers in a market without commissioned intermediaries.
President Obama himself explained the rationale for the administration's plans. "We are not going to point fingers or say anyone did anything wrong," said the president. "That's not how we'll move forward in fixing our economy."
"What we need now," the president said, "is a real estate sales force that will help us to stabilize home prices, according to specific regulations and price points set by my administration. We need to take the emotion and the exuberance out of the process. We need predictable, orderly prices and guaranteed returns, at a specific and pre-identified rate, for people who make the decision to purchase a home during these difficult economic times."
President Obama concluded, "I regret to say that the free market failed us when prices rose too far, too fast, and it is failing us now as prices sink too low. That has been bad for our economy, and I'm telling you today, it's over."