Thursday, April 4, 2013

Have You Heard About This One?

I read the below article with total disbelief.  The President has proposed that we again pressure banks to give home loans to as many as possible.  He apparently believes that will jump start the economy.  Haven't we tried that before?  Wasn't that a primary reason for the Housing Collapse from which we haven't yet recovered?  And, our President wants to do it again?  I am beginning to think the man has a few loose screws.

Read this quote and tell me I misunderstand what the President and his key housing "experts" are planning to do.  "The FHA, in coordination with the White House, is working to develop new policies to make clear to banks that they will not lose their guarantees or face other legal action if loans that conform to the program’s standards later default. Officials hope the FHA’s actions will then spur Fannie and Freddie to do the same."
Digest that quote and then consider this one.  "And now, after whining for more bank regulations, the White House wants even looser lending standards. Let's lower our standards so everyone qualifies for a loan. Again! And while we're at it, let's make the banks immune from prosecution! Then let's put taxpayers at risk via 'taxpayer-backed programs' for the whole boondoggle."

Remember that it was idiots within government in both the Clinton and Bush administrations who pushed for similar, if not the same, programs.  And  compliant Congresses went along by writing the laws implementing a whole host of "great" ideas (loose lending standards, no/low down payments, etc.).  Then government officials and Congress started pressuring relunctant banks/lending institutions to go along.  They needed to get with the program.  It was the right thing to do you know.  Everybody regardless of ability to pay deserves to own their own home and have a piece of the American dream.  And besides the government promised to protect the interests of lenders should anything go wrong.  They had the means to do so.  We will just raise taxes to bail out banks that get in trouble. Well, banks got greedy and started creating new, more modern investment vehicles that were risky but they didn't tell anybody, especially the investors.  What could go wrong?  Besides the government's got our backs. Then the bubble burst.  Do you remember who paid the price and is still paying the price?  Hint.  It was not the banks.  It was average American taxpayers.

As the author of the article says "This is all so obviously stupid that only a fool could propose it.  And a fool in the highest spot did just that."

Are you going to stand by and let this happen again?    George Burns

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