Thursday, Sep 09, 2010
Nick and Dave should ponder this one
Bloomberg: Subprime 2.0 Is Coming Soon to a Suburb Near You
On the second anniversary of the bailouts of Fannie Mae and Freddie Mac, it’s now obvious that weak lending standards, serving the political interest of affordable housing for all, were the main reason for the nation’s mortgage meltdown.
But the government just can’t permit lending to anyone and everyone; it must insist on prudent judgment about who will repay and who will default. Not only will borrowers who lack a down payment, steady income, employment and a good credit history probably get into trouble -- surprise! -- but too much irresponsible lending also creates artificial demand for houses, driving prices into the stratosphere and, as we have just experienced, puts all homeowners at risk.
Posted by sureseam @ 07:42 AM (649 views) Add Comment
5 Comments
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1. sureseam said...
The last paragraph is delightful:
"Here’s my proposal to bring Congress’s penchant for imprudent lending to a quick end: All congressional pension assets should be invested in funds backed solely by the high- risk loans mandated by federal housing legislation. I have a feeling that things would change fast."
Could we apply this principle?
2. This comment has been removed as it was found to be in breach of our Blog Policies.
3. richc said...
This article is total politicised BS masquerading as economic analysis, blaming Obama for the subprime disaster even though it all happened under Republican leadership. It is not "now obvious that weak lending standards, serving the political interest of affordable housing for all, were the main reason for the nation’s mortgage meltdown". That's nothing but a convenient excuse to let off the bankers.
4. icarus said...
@2 - yes, I read as far as 'weak lending standards, serving the political interests of affordable housing for all' and decided the rest wasn't worth reading.
5. Yeahright said...
2 and 3 Huh?
Did we read the same article?
Quote: Substituted was a scam of liberalized lending standards that turned out to be no standards at all. In 1990, one in 200 home-purchase loans (all government insured) had a down payment of less than or equal to 3 percent. By 2003, one in seven home buyers had such a low down payment, and by 2006 about one in three put no money down.
2003 and 2006 were during Republican leadership, so how you can claim he is blaming Obama the wonder kid is beyond me.
I recommend you read this, written by someone who wanted a job helping the poor in Los Angeles, and ended up by selling them quango approved dodgy mortgages:
http://www.ft.com/cms/s/2/f64a9e36-9da3-11de-9f4a-00144feabdc0,dwp_uuid=a712eb94-dc2b-11da-890d-0000779e2340.html: