The reason we are in a financial mess is because the government and particularly the congress has been putting pressure on lenders to make the dream of home ownership a reality for “all”. Although this is a lofty goal, the bottom line is, home ownership needs to be tied to people’s ability to pay. Not everyone will want to own a home or have the financial capacity.
Over the years congress has made promises to constituents of “guaranteeing” home ownership, healthcare, a job, college education, etc… The problem is that all of these pursuits need to be accompanied by a responsibility on the individual to have a stake in the “game”. They are not things you can “guarantee”. These are things that need to be earned and/or paid for.
The reason Country Wide Mortgage failed is because the Chairman in an effort to garner privilege from the Banking Committee and the members of congress on the committee, decided long ago to relax mortgage requirements to give mortgages to people that under normal rules would not qualify. This action gave him many personal benefits as it did for Senator Dodd and others (special mortgage rates) benefits which went unnoticed during the housing “boom”. This helped fuel the housing boom which is currently coming under closer scrutiny by the same congress that caused the bust.
So now we have a tangled web of mortgages that were encouraged by congress, given out all too willingly by financial institutions to unqualified or marginally qualified individuals going bust, and what is the answer? A government bailout. So we no longer have a housing “market”, we have a “guarantee” of home ownership for individuals, and no consequences for bad lending practices for mortgage companies. What this is folks is socialism coming in the back door.
They could never take control of an entire industry without the guise of a crisis. Is it a crisis? You bet, but one that could have been avoided by allowing market conditions to dictate mortgage policy, not government requirements dictating mortgage policy. The beauty of the market is it is ruthless against improper activity. The market consequence for bad lending policy is you go out of business. The consequence of government run mortgage policy is business as “usual”. No losers except for we the idiot taxpayers that allow this to happen.
Impeach the entire congress for financial ignorance… That would be good market policy…
True knowledge of American history is necessary to insure the future of the America we love… This is an important time in our country's history. We must be wise and measured as we choose our leaders going forward.
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