Feds caused the mortgage meltdown. So why does everyone in DC think the solution is even more fed government?
by Mortgage Rates on Tuesday, October 12th, 2010 | 7 Comments
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Well, I dont’ think it was the Feds who caused the meltdown. I think it was a combination of predatory lenders, unrealistic borrowers and government legislators who looked the other way.
when youre a hammer every problem looks like a nail.
The Fed has done nothing to encourage high risk lending…and Fannie and Freddie are quasi-government. They are not actually run by the government, they are just backed by it.
The lending derregulation (or regulation depending on how you view it) was well intentioned yet misguided. It was to keep banks from excluding consumers that were consistently being denied mortgages…not necessarily based on their ability to pay, but moreso based on their skin color or location. This is known as red lineing and many banks were denying loans to consumers simply because of where they lived. Unfortunately, as is the case with many well intentioned government interventions, the intentions of the plan were taken to the extreme and ended up forcing lenders to ignore customer credit worthiness. This was thanks to the greed of many in Washington and their corporate partners that were looking to profit off of the new legislation.
Simply not true. Its americans terrible spending habbits that got us into this mess. Spending more money then they make each year…
Because the fed has been operating under the supervision of the banking and finance committee of the senate . it was instituting the instructions the senate GAVE it… the answer is to let the fed do it’s job without concern for increasing home ownership within minority populations.
you do realize that the fed informed the Senate that this exact situation was likely to happen years ago right?
Great question, we the people need to see the beast for what it is and slay it before it completely enslaves us. Knowledge is power and truth will set us free.
Added:
CONGRESSMAN LOUIS T. McFADDEN: “The Federal Reserve (Banks) are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this Nation is run by the International Bankers”.
http://www.usa-the-republic.com/banks/federal%20reserve.html
I agree largely with TG, but I disagree that the lenders were “forced” to underwrite completely irresponsible loans. No bank (and likewise, no borrower) should agree to buy/sell an asset over a period of time when there is no reasonable expectation that the borrower will be able to pay for it. This kind of thinking perverts the laws of supply and demand: Supply and demand regulates prices because people only buy things when they can afford it, or when they can afford to responsibly borrow and finance enough to buy it. It you remove that basic tenet of the rule to artificially increase demand across the board, the system is bound to implode. I am aware of no government rule or legislation that mandated the banking industry to make loans that were virtually certain to default–but they made them anyway to make the short term gains.