Saturday, August 20, 2011

I sure am glad that the government had nothing to do with the housing crash.

It was just a lack of regulation, not an attempt to exert government influence over yet another area.  I mean obviously it was the banks fault, not the governemt controlled businesses which controlled over 50% (probably higher) of all mortages. 

And the solution?  Why more government influence!  That is the ticket!

Dobb-Frank (not the bill, the legislators)?  Their hands are clean, I mean they tried.


WASHINGTON (AP) -- The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices.

The Federal Housing Finance Agency said Wednesday it is seeking input from investors on how to rent homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration.

The U.S. government rescued Fannie and Freddie in September 2008 and has funded them since the financial crisis. The mortgage giants own or guarantee about half of the nation's mortgages and nearly all new mortgages.

At the end of last month, the government owned roughly 248,000 foreclosed homes, officials said. About 70,000 of those are listed for sale. But officials expect the number of foreclosures to soar in the coming months.

Many foreclosures have been stalled so attorneys general and federal regulators can investigate whether lenders cut corners and improperly handled thousands of cases. Once a settlement is finalized, foreclosures are expected to pick up again and further depress home prices.

Converting the homes into rentals may reduce "credit losses and help stabilize neighborhoods and home values," said Edward DeMarco, acting director of the Federal Housing Finance Agency, which oversees Fannie and Freddie.

Homes in foreclosure sell at a 20 percent discount on average, which can hurt prices of surrounding homes.


Baxter said...

The champions of deregulation where in charge as more and more subprime loans were repackaged and sold as AAA paper. The Republican cops looked the other way as they were too busy counting the campaign donations received from the operations they were supposed to be regulating.

Jim G. said...

I guess restarting history as a...falsehood is...going to be progressively more necessary. That must be what "progressive" refers to!

Let's revisit the theory of the bailout. The government holds a safety net under the financial system, preventing a worse panic, with consumers and business cutting back spending more radically, with more people losing jobs, with more houses going into foreclosure.

It made sense on paper and underlies claims today that the government has been a net profiter from its bailout activities.

But it becomes apparent that the 2008 crisis isn't over. And our bailout strategy? In one presumed lesson of the Great Depression, a splurge of deficit-financed spending is supposed to support the economy while consumers and businesses get over their shellshock. But as George Soros noted to Der Spiegel, the U.S. government in the 1930s wasn't saddled with huge debt. Unless today's deficit spending is visibly directed at projects with a positive return, he says, it just frightens the public that the government itself is going bankrupt.

As we now know, the Obama stimulus did not fulfill the Soros condition—it consisted mostly of transfers to support the incomes of people who weren't working or government employees who were already employed.

Under bailout theory, housing was supposed to hit bottom, but the bottom would be higher than if the economy had lapsed into depression. But housing hasn't been allowed to hit bottom, thanks to policies designed to foil foreclosures and keep people in houses they can't afford and have stopped paying for. As a result, the housing and construction industries remain paralyzed.