Some Background on the Proposed Mortgage Reform Efforts

[longknife]

The Washington Beacon article claims that a man who was part of the banking industry that caused the housing crash is the key figure in writing the legislation to reform federal laws and organizations.

Here's an excerpt from the article that should send up red flags to all of us:

The bipartisan legislation would dissolve government-sponsored enterprises Fannie Mae and Freddie Mac and replace them with a new federal agency called the Federal Mortgage Insurance Corporation [FMIC].

Under the law, the FMIC would cover 90 percent of investor losses on mortgage-backed securities, and, in the event of a national financial crisis, 100 percent of these losses.

“[The banks and mortgage lenders] think Fannie and Freddie are being too stingy, and they want to loosen the spigot some more with government support,” said John Berlau, a senior fellow at the Competitive Enterprise Institute.

I don't think anybody doesn't feel we should get rid of Freddie Mac and Fannie Mae. But to replace it with another, single, massive government agency? Which will probably be staffed with the same bureaucrats who manned to old ones?

What kind of reform would that be?

Read the full article @ Banker Who Helped Crash Housing Market Helped Crafting Mortgage Reform | Washington Free Beacon

S. 1217: Housing Finance Reform and Taxpayer Protection Act of 2013 was introduced in June of last year and can be followed @ https://www.govtrack.us

 

[DGS49]

The idea that banks should be able to sell off their mortgages, keep the profits and lay the risk off on, essentially, the taxpayers is perverse in the extreme.

The banks have money to lend. They are in the business of assessing risks and making loans. They should be prohibited from selling mortgage paper. WTF?