Monday, November 19, 2007

Mortgage crisis

A few comments on the mortgage 'crisis'.

I asked a mortgage loan officer today his opinion on what the government should do about the recent increase in foreclosures. He basically wants to keep regulation of actual lending standards fairly relaxed. Not surprising for someone in his business. (We were doing an open house together, and I may actually have found a hot buyer for the house! Yeah!)

I think Congress is in a world of trouble here. Anything they do is going to be wrong. In particular the Democrats are seriously over a barrel on this one.

Now, normally, this sounds like the kind of issue that Democrats can really get behind. Big business screwing the little guy, big business being blind to the obvious errors of their ways, all that populist blow.

But think about this. Democrats are proposing standards on who can be approved for a loan. Uh oh. Who, specifically what kinds of people, are likely to be turned down? Lower income. Which means of course that recent immigrants, Blacks, Latinos and other 'disadvantaged' groups are going to be hit disproportionately. Any group whose members have on average lower incomes, higher income to debt ratios, or lower savings is going to be turned down for loans more than are lily Whites, certain Asian groups etc. We all know who is where on this curve.

Now the Democrats have spent a lot of political capital championing the rights of the disadvantaged to get loans for homes. Banks are under tremendous legal pressure to give out enough loans to members of these groups so as not to appear to be discriminating unfairly for reasons of race, sex or whatever.

But Democrats want to solve this economic problem. But the only way to solve it is to injure their pets. And these pets can bite back at the ballot box.

Republicans have no fears on this issue. Everyone knows that Republicans are cold-hearted bastards who don't care if minorities starve under the bridges of our great country. None of these people vote in large enough numbers for Republicans anyway for any individual Republican pol to worry much.

I figure there will be sound and fury, and nothing more. Democrats will blow hot for a few months, then produce some weak weasely bill that promises glorious futures and delivers nothing but paperwork.

Republicans will oppose the bill for stupid reasons that have little to do with the facts, then vote for it anyway, hoping to get credit from people who will never consider voting for them anyway.

My own opinion? Congress should do nothing at all. Lots of formerly high paid execs will get the ax, lending will briefly be more intelligently done, then a new cycle will start. And in another ten years or so another bubble will burst. It is gonna happen anyway, why not let the market punish the companies stupid or venal enough to get in that business? At least give the poor and ignorant a CHANCE to get in. Some will do it right and get ahead. Some will fail and have a foreclosure on their credit records for a few years. This ain't the 1930s. A foreclosure is not the killer it once was.

No comments:

Blogging Fusion Blog Directory Blogging Fusion Blog Directory