The title of this session is “Prescriptions for Housing Recovery.” I wish I had such a prescription. Problems related to mortgage debt and mortgage underwriting played a central role in the recent financial crisis and resulted in a massive dislocation in the housing market. It is difficult to think of a single prescription that by itself will generate a sustainable recovery in housing.
Low cost-efficiency and weak income-generation capacity in some parts of the banking sector, both linked to overcapacity, continue to weigh on banks’ longterm profitability prospects. Recognising the challenges at this juncture, consolidation via mergers and acquisitions could be one potential avenue for reducing overcapacity in the sector.