Congress has a convenient way of twisting the truth about how this country got into the mortgage mess.
"Those who cannot remember the past are condemned to repeat it"
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders (emphasis added).
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans (emphasis added). Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people (emphasis added) and felt pressure from stock holders to maintain its phenomenal growth in profits....
Extending easy credit to those that can't pay will continue to lead to further stress.
In short, I am not certain the bailout package from Congress addresses the issue occurring in the money markets. Maybe on a short term basis, but likely not a long term fix. Broadening FDIC insurance is a good step as well as temporarily altering the mark-to-market FAS 157 accounting rule. The unfortunate aspect of this entire situation is our Congressional representatives do not seem to grasp what are the real structural problems. One only needs to look at the amount of "pork" amendments added to this bailout bill.
The markets and our economy are resilient and will get through this. One thing is certain though, incredible investment opportunities are being presented to investors.
In short, I am not certain the bailout package from Congress addresses the issue occurring in the money markets. Maybe on a short term basis, but likely not a long term fix. Broadening FDIC insurance is a good step as well as temporarily altering the mark-to-market FAS 157 accounting rule. The unfortunate aspect of this entire situation is our Congressional representatives do not seem to grasp what are the real structural problems. One only needs to look at the amount of "pork" amendments added to this bailout bill.
The markets and our economy are resilient and will get through this. One thing is certain though, incredible investment opportunities are being presented to investors.
Source:
Fannie Mae Eases Credit To Aid Mortgage Lending
The New York Times
By: Steven A. Holmes
September 30, 1999
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1
1 comment :
It seems that no matter what governments do, the markets continue to fall. I have even read that it is the intervention by governments to stabilize the markets that is causing the problem by preventing capitulation. The argument being that governments should stop intervening, the markets would crash and a bottom would be formed!
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