Skip to comments.Reinflating the housing bubble (The Federal Housing Authority is at it again)
Posted on 04/11/2013 7:11:36 AM PDT by SeekAndFind
There is evidently no idea bad enough and no failure severe enough to stop the government from trying it once again. In myopia remarkable even by abysmal government standards, the White House is pushing for policies that fueled the housing bubble, which burst a mere five years ago. Reintroducing those policies at this stage of a nascent recovery in the housing market will set the stage for repeating history, and very likely leave taxpayers on the hook once again for another bailout.
Last week, the administration began exerting pressure on banks to lend to people with lower credit scores, arguing that the gains from the current modest recovery are largely being captured by either investors or provident people with excellent credit scores, and that this strategy leaves out a pool of potential purchasers.
The problem is, of course, that banks are in the business of making profits. Some bank surely would lend to these people if it made sense to do so. Under the current legal and economic circumstances, it does not, in fact, make any sense to make these loans. Far from fueling growth, distorting the market further will make economic recovery that much more difficult.
The main problems with the functioning of the housing market are the extensive intervention by government on the one hand and monetary policy that keeps interest rates at levels extraordinarily low by historical standards on the other. The housing market is further distorted by the existence of Fannie Mae and Freddie Mac, which remain major players, and the Federal Housing Administration (FHA), which generates a third of new loans, well above its pre-bust and even pre-bubble share.
(Excerpt) Read more at washingtontimes.com ...
And lookie here -— Obama is at it again too...
Obama administration pushes banks to make home loans to people with weaker credit
By Zachary A. Goldfarb,April 02, 2013
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obamas economic advisers and outside experts say the nations 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.
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But this time around, when the bubble bursts, the Fed via QE3 will own the mortgages placing the Dems in position to offer the homes as government owned apartments.
The banks need to identify by name the administration culprits who are pressuring them. We can insist they be punished or fired....