[MTAtech]

Quote:

Originally Posted by Chuckiechan

One lesson should be clear, and the Bush administration should have listened to the hard right:

Do not let poor people buy homes. By lowering the bar for qualifying for home ownership, you'll get a certain percentage of "riff-raff" who will never be able to manage home ownership.

Keeping the down payments high, keeps the irresponsible out. This also keeps the poor out.

You always take more risk when you give poor people loans.

The Bush administration and the Republican congress are guilty of trying to help increase home ownership in the lower economic rungs by lowering the bar for loans.

Actually, the administration and the Republican Congress didn't give a damn about the poor people getting loans. The Reps were listening to the voices of Wall Street that created a shadow banking system to avoid banking regulation. The motive, as always, was increased profits. Their method was for finance companies to sell subprime and nontraditional mortgages to millions of Americans who they didn't care couldn't afford the mortgage payments. They didn't care because the they assumed that if the borrower defaulted the could foreclose on the house and get their money out. That changed when house prices fell.

While it is true that the Federal Reserve and the Bush Administration was asleep at the wheel, I didn't hear anyone from the "hard-right" voicing any objection. The Bush Administration is the hard right. Their philosophy is that there isn't a government regulation that shouldn't be weakened. However, as early as 2005, liberal economist Paul Krugman was warning about the housing bubble. A year ago, Krugman advocated against bail-outs because that rewarded the people who got us into this mess and instead, advocated forcing work-outs of mortgage loans.