Another push to make home loans to people with weaker credit

[Benko]

Because people don't learn from past mistakes


http://www.washingtonpost.com/business/ ... story.html

[MachineGhost]

How is making subprime loans more easy to qualify for helping homeowners?  Again, the elephant in the room (mortgage debt restructuring) is ignored.  We truly have morons in DC.  I really don't understand how the world works with these people jamming up the cogs everywhere.

[Benko]

How is making subprime loans more easy to qualify for helping homeowners?

It makes liberals feel better, like they are doing some good.  And that is the only thing that counts.

[Tyler]

President Obama’s economic advisers and outside experts say the nation’s 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.

A point I've seen elsewhere is that some idealists (a nice way of saying economically illiterate) confuse the cause and effect relationship of a middle class status and home ownership.  The pragmatic view is that a family must first be middle class to afford a home and a car.  Social engineers believe that by granting everyone the status symbols of the middle class (house, car, etc) they thereby lift people into the middle class.  The social signal is more important than the underlying reality, and economics are irrelevant (or just plain unfair). 

[clacy]

How is making subprime loans more easy to qualify for helping homeowners?  Again, the elephant in the room (mortgage debt restructuring) is ignored.  We truly have morons in DC.  I really don't understand how the world works with these people jamming up the cogs everywhere.

I tend to believe these types of decisions aren't made because of a lack of economic IQ, but rather the politicians are trying to pad their economic stats and have something to score political points with and tout.

It seems like Obama is just doing what most politicians will do when given the chance..... Throw money at risk assets such as stocks and real estate via QE, take credit for the asset inflation and kick the can down the road to the next guy.

Business as usual by policy makers in DC, and it was much the same under Bush.

[Pointedstick]

I tend to believe these types of decisions aren't made because of a lack of economic IQ, but rather the politicians are trying to pad their economic stats and have something to score political points with and tout.

It seems like Obama is just doing what most politicians will do when given the chance..... Throw money at risk assets such as stocks and real estate via QE, take credit for the asset inflation and kick the can down the road to the next guy.

Business as usual by policy makers in DC, and it was much the same under Bush.

I see it as more about pleasing constituents. There are a lot of wealthy yet economically illiterate Democratic voters who really like the idea of improving the lot of the poor by helping them get into debt to afford really expensive things (houses, college). I get that they view these goods and services as positive, but they like this weird roundabout way of first supporting policies that make those goods and services expensive, then supporting policies that make loans available to the people who can no longer directly afford those goods due to their expense. Seems like an awfully roundabout and dangerous way of helping the poor, if you ask me.

[Benko]

PS,

But it does not help the poor (unless you disagree). 

Clacy,

Fanny and Freddy and the first round of brain dead loans to people who could not afford it was started by democrats and Bush warned about it but was ignored.

[Pointedstick]

PS,

But it does not help the poor (unless you disagree). 

I think that it's generally a good thing when poor people get useful college degrees and own appropriately-sized houses. I do not view it as good thing when poor people can take out loans for hundreds of thousands of dollars to pay for these things beyond their financial means because politicians forced the banks to make those loans. Servicing a large debt is hard, and all it takes is an unexpected expense to bust the average poor family's monthly budget. Loans that big can be a curse.

But there's nothing wrong with college education or home ownership in and of themselves.

[Reub]

How is making subprime loans more easy to qualify for helping homeowners?

It makes liberals feel better, like they are doing some good.  And that is the only thing that counts.

Benko, this time it's different. Today's poor have access to more free cell phones, birth control, food stamps, disability insurance, and free health care. They are financially in much better shape than in the past to buy an expensive home.

[Benko]

Today's poor...are financially in much better shape than in the past to buy an expensive home.

Then the banks would deem them worthy of lending money to.  Or am I missing something?

[smurff]

The biggest beneficiaries I see for this move are not the poor, wannabe middle class, conservatives, or liberals, but home builders, home inspection and other services, title loan companies, mortgage underwriters, real estate agents and brokerages, banks, companies that sell building supplies, and credit bureaus.  Etc.

Congress and the president do not pass laws or make regulations of any kind unless they will benefit their constituents.  As we have seen over the past couple of decades, their constituents are corporations, not the electorate.

[Pointedstick]

The biggest beneficiaries I see for this move are not the poor, wannabe middle class, conservatives, or liberals, but home builders, home inspection and other services, title loan companies, mortgage underwriters, real estate agents and brokerages, banks, companies that sell building supplies, and credit bureaus.  Etc.

Congress and the president do not pass laws or make regulations of any kind unless they will benefit their constituents.  As we have seen over the past couple of decades, their constituents are corporations, not the electorate.

It's both. Corporations provide much needed money and model laws, and people provide votes. That's why stuff like this happens; it's a perfect intersection of both.

[Benko]

Congress and the president do not pass laws or make regulations of any kind unless they will benefit their constituents.  As we have seen over the past couple of decades, their constituents are corporations, not the electorate.

So what constituent(s) benefits from non-approval of that pipeline?

[Pointedstick]

Congress and the president do not pass laws or make regulations of any kind unless they will benefit their constituents.  As we have seen over the past couple of decades, their constituents are corporations, not the electorate.

So what constituent(s) benefits from non-approval of that pipeline?

The whole principle of skillful politics is to impose distributed costs to grant concentrated benefits. Those who receive the concentrated  benefit have a much stronger incentive to support the legislation than those who bear the distributed, watered-down cost have to oppose it.

To illustrate this by bringing up a contrast, witness how the fiercest opposition comes to legislation that proposed to do the opposite: to impose concentrated costs with distributed benefits, for example with gun control, and abortion. Those garner must opposition because there are a lot of people who see the concrete disadvantage to them personally.

It's much harder to drum up outrage for the $0.25 tax that hits everyone than is is for the $25,000 tax that hits 5% of the population.

[clacy]

PS,

But it does not help the poor (unless you disagree). 

Clacy,

Fanny and Freddy and the first round of brain dead loans to people who could not afford it was started by democrats and Bush warned about it but was ignored.

Benko, I get that, but you don't seriously consider Bush to have been a fiscally conservative President do you?

[Benko]

OMG no. 

[Early Cuyler]

Congress and the president do not pass laws or make regulations of any kind unless they will benefit their constituents.  As we have seen over the past couple of decades, their constituents are corporations, not the electorate.

So what constituent(s) benefits from non-approval of that pipeline?

The whole principle of skillful politics is to impose distributed costs to grant concentrated benefits. Those who receive the concentrated  benefit have a much stronger incentive to support the legislation than those who bear the distributed, watered-down cost have to oppose it.

To illustrate this by bringing up a contrast, witness how the fiercest opposition comes to legislation that proposed to do the opposite: to impose concentrated costs with distributed benefits, for example with gun control, and abortion. Those garner must opposition because there are a lot of people who see the concrete disadvantage to them personally.

It's much harder to drum up outrage for the $0.25 tax that hits everyone than is is for the $25,000 tax that hits 5% of the population.

I've heard Ron Paul make a very similar argument. Fwiw, I agree with both of you.