Another Day, Another Housing Plan
From Homescape
written by Amy Le on Monday, March 17, 9:44AM
When you break something, you can either do three things: Nothing, replace it, or you can try fixing it yourself. When it comes to fixing one of the worst housing crises in history, it looks like the Bush administration wants the guys who broke it, not to do it again. The administration unveiled last Thursday the outlines of a new plan that is meant more to prevent future housing crises within than to address the current one, according to The New York Times. The administration’s previous initiative, Hope Now, has been under fire for its shortcomings, forcing officials to do more to rein in the housing crisis.
More is less
The new plan, which relies primarily on state regulators and private industry to tighten their oversight of financial markets, calls on states to issue nationwide licensing standards for mortgage brokers. In addition, it would require lenders to make more complete disclosures about payment terms to home buyers. And it would curtail possible conflicts of interest at companies that assign levels of risk to packages of mortgages that are sold to investors.
Administration officials said most of the proposals would be executed in the coming months through regulations issued by federal banking and securities regulators, and by new committees run by industry executives. A few elements, like tightening rules for mortgage brokers, may require federal legislation. But Bush administration officials said, to avoid burdensome regulation, the plan provides a limited role for the federal government.
“This effort is not about finding excuses and scapegoats,” U.S. Treasury Secretary, Henry Paulson Jr., said in a speech reported by The Times. “Poor judgment and poor market practices led to mistakes by all participants.”
Poor judgment
If the current crisis is a result of “poor judgment” and “poor market practices,” then why is it that the mortgage brokers who pushed the risky loans onto homeowners, the bond underwriters who loosened standards and Wall Street firms that failed to measure the risk of the instruments they were buying and selling, are the ones in charge of overseeing the administrations new plan now? It’s like letting the inmates run the asylum.
Sure the proposal calls for state regulators to issue nationwide licensing standards, but give me some good reasons why the American public should trust that the lending industry and the financial firms will do enough to prevent these problems from occurring again?
I’m not a mortgage expert, nor do understand every analysis the bigwigs at Wall Street regurgitate on the news, but it’s hard for me to believe that they didn’t foresee the problems developing within their own industry. These top executives and industry leaders were the ones who had their pulse on the market. I’m not finger-pointing. I’d just like a little accountability — and that also includes the homeowners who bought more than they could afford. You break it, you pay for it. That’s a simple enough solution for me.
Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.
digg this
save to delicious
Equal Housing Opportunity