Fed: You’re Stupid - We Have To Help

J.J. Jackson* | December 21, 2007

Well, here comes the Fed again with their latest meddling. Continuing to play on the sub-prime lending mess where citizens got in over their head by their own free will, the Fed wants new regulation to help all these poor, and apparently in the Fed’s eyes, too stupid to know how to do math, public school educated citizens.

WASHINGTON: The Federal Reserve moved Tuesday to impose tough new restrictions meant to curb unfair and deceptive home-lending practices and prevent a recurrence of the meltdown in subprime mortgages this year.

By a 5-to-0 vote, the Fed approved a plan that would tighten provisions meant to protect borrowers and apply them to a far larger share of home loans - whether from banks, mortgage companies or other lenders - than under current regulations.

The proposed rules underscore the more assertive role the Fed is now prepared to take in regulating lending, a big shift from the central bank’s approach in the past. In general, the rules are meant to deter unscrupulous lenders from persuading people that they can afford loans that ought to be out of their reach. By extension, the rules are also intended to keep would-be buyers from deceiving themselves about the debt burdens they can shoulder.

So first the government was upset that banks were redlining regions and refusing to lend money to people that they considered bad risks. Then when they pressure the banks and lenders to stop this practice and get them to loan money to bad risks they are upset that the banks loaned them money?

Talk about a self perpetuating regulator machine. How long until they get upset again that these bad risks are not getting any loans?

Here’s a better idea. Stop the regulation. If you take out more than you can repay, you deal with the consequences. If a bank wants to take a risk on a bad risk and both sides agree to the terms of the contract then let the market play out.

Contributor's website: http://www.libertyreborn.com

Similar posts:

*Content posted by a user may not be completely written by that user. Content from another source is cited in either block quotes, with quotes or with a link to the original material. Content from other sites is posted for commentary and news purposes under fair use. Each user is responsible for their own postings and a particular posting should not be construed as being endorsed by this site or it's owner.