Thursday, February 19, 2009

The Octomom Mortgage Rescue Plan

Obama's Mortgage Rescue plan is only going to make things worse. For every Octomom family that it rescues from greedy bankers, a dozen other families will find mortgages priced out of their reach. Since it imposes additional costs and risks on mortgage providers, fewer new mortgages will be offered.

Why would a bank - any bank - take the risk of offering a mortgage? Consider that our government provides finding for ACORN, which will now use civil disobedience tactics to prevent foreclosures. It is far safer to invest in Chinese coal plants. The Chinese economy is troubled too, but at least in China there is a government that is willing to support investors.

3 comments:

DBB said...

What risk? Banks right now have incentives to take any and all risks - if they succeed, the execs all get rich. If they fail, the government hands them billions of dollars with no strings attached and they all get rich. So tell me gain why banks won't take risks?

Sweating Through fog said...

DBB,

Banks aren't lending now, otherwise we wouldn't have a credit crisis. They'll be even more reluctant to lend because the government is making it easier to cram down new terms.

DBB said...

I don't think that is about risk. I think they aren't lending because they are using that as leverage to get more money and concessions from the government. If getting $350 Billion isn't enough to get them lending again, I think something more is up.

They knew going in they were making loans so risky as to be junk, but they did it anyway because they were on the gravy train.

Now the junk loans are on the books and they want the government to pay way above market price to take them away.