Predatory Legislators

Had lenders exercised better judgment and had borrowers avoided overly burdensome debt loads, both parties would clearly be in better financial positions today. Instead, as borrowers were demanding the credit to fuel their dreams of instant real estate riches, lenders were being ordered to accommodate them.

In past generations, homebuyers were required to save for down payments and postpone their purchases until they could actually afford conventional 30-year fixed mortgages. But in recent years, as home ownership became a matter of public policy, the government accused lenders of discrimination and urged lower standards and easier terms. With government guarantees in place, the mortgage industry was happy to both expand their revenues and promote a better society.

Politicians, in their zeal to "put a chicken in every pot" and thus acquire votes they might not otherwise procure, legislated lenders into providing loans to poor credit risks ( we call them subprime loans now). Now that the chicken has come home to roost, these same politicians are castigating these same lenders for getting us into this mess and, at the same time, providing them with loot and demanding they do it again - i.e.; make more loans available to people who can't afford to borrow it. Trouble is, lenders, having learned their lesson, are looking for responsible borrowers now and most responsible people - unwilling to take on more debt - are busy paying off debt and saving what little excess income they can muster. Thus politicians, intent on encouraging irresponsible spending, are finding themselves confronted with a wiser, less gullible and more responsible populace. Never fear though because, if the people won't borrow and spend, the Fed and the Obama administration will.