Obama administration pushes banks to make home loans to people with weaker credit


#1

Obama administration pushes banks to make home loans to people with weaker credit
By Zachary A. Goldfarb


Published: April 2

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

“If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,” said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.

A Clinton policy recycled … what could possibly go wrong …! And that next housing bubble will be the Obama MALAdministration’s intended result!


#2

Politicians need to be required to take a US history class each semester.


#3

They aren’t doing this out of ignorance or stupidity; they’re doing it for nefarious reasons.


#4

Gee, I’m sure it will work this time.


#5

This is how Democratic economics works. In the short term, its purely politically motivated - give these young homeowners and families from low-income areas the chance to purchase property and win their hearts and minds, buying yourself some cheap and easy votes for the next election (or does anyone else wonder why a nitwit like Al Gore came so close to actually becoming the Leader of the Free World in 2000?). In the longer term, though, the economic fallout also has political purpose - the housing market crashes, as it has in the past decade, and the cycle repeats itself again. Republican leaders try to fix the economy with longer-term solutions like free-market capitalism, which allows Democrats to paint them as bullying elitists in the eyes of the downtrodden; the democrats can then sail to power on these pretences and start the whole process over again. Rinse and repeat.


#6

This is the same thing that led to the previous housing boom and eventually the bust, thanks to the Fed.


#7

Very well, and succinctly put there, Semper Fi.
You left out one teensy part.
If I may? That’d be the part where the Dems promise to fix everything by taxing those eeevil “rich” people.


#8

What’s left to say other than, here we go again. The quintessential taxpayer backed bribe aimed at generating votes. I guess the message is that if such foolishness nearly brought the country’s economy down once, why not try it again? If our politicians displayed more ethical conduct and less arrogance, and we the voters demanded that from them, we might be able to dig our way out of no growth, too few jobs and a true 14% unemployment rate.

They don’t, they won’t, we don’t, we won’t so we’re screwed.

Unfortunately, those of us who understand how this works and the long term consequences are also probably outnumbered.