Even as lenders struggle to pull themselves out of the credit crisis, signs of a new and potentially dangerous infatuation with risky borrowers are emerging. From credit cards to auto loans to mortgages, the hunger for new business as the crisis ebbs is causing some financial institutions to weaken lending standards and woo borrowers who mightn't be able to pay.What particularly galls me is that Fannie Mae may be throwing caution to the wind - again.
Fannie Mae, seized by the U.S. government in 2008 to avert the mortgage company's failure, launched an initiative in January that allows some first-time home buyers to get a loan with a down payment of as little as $1,000.This situation is going to be further exacerbated by the passage of the new financial institution regulation bill, which is frontloaded with requirements that will have the effect of shifting more taxpayer-subsidized money toward poor credit risks (hey, thanks Scott Brown!)
This is the kind of thing that pushes the needle on my pessimism-meter into red-line territory. Not so much the boom-and-bust credit cycles; they are inevitable due to that indefatigable vice, human greed. But those generally sort themselves out without the costly and permanent intervention of the state. The government under Obama and the Democrats (and under Bush, too, to some extent) has created an organic intervention, a living thing that keeps growing in quantum leaps and bounds and threatens to ruin not only the impecunious, but the prudent, as well.
As citizens, we can no longer afford to act like lazy or uninterested members of a corporate board, delegating everything to the chief executive officer and his staff. We have to stay informed and, when necessary, throw the rascals out. So let’s prepare to do some serious lifting and heaving this November.
Update: Jeff S. sent a link to this related story. Scary stuff.
I agree, we need to boot the louses out of office.
ReplyDeleteBut you should read this as well.
I'm beginning to think that there aren't enough boots to deal with all the louses in the world.
Good article, Jeff.
ReplyDeleteI have a small cautionary note to make, that is probably entirely unnecessary for Paco's readers. A strong showing in November may convince too many of us that the problem is solved. Far from it! The real battle is to unseat in 2012 the person now occupying the White House before he can put his entire plan into action. So, let's remember that this is a Long War, and November should be a turning point, not an end point.
ReplyDeleteNB: Absolutely correct. We are embarked on a "nation-building" exercise of our own, and it will take many years to undo the damage done by liberals.
ReplyDelete