When Mr. Stevens arrived in July 2009, the FHA didn't have anyone in charge of monitoring risk, including whether certain loan products or lenders were exposing the agency to excessive losses.Well that's one way to clear and guarantee a lot of nutty loans, and make sure politically friendly banks were not refused guarantees for their nutty loan product.
Tuesday, January 19, 2010
FHA Didn't Have Anyone Monitoring Risk!!
Senior bank VP Michael Dutton sends along this WSJ clip, about the Federal Housing Administration, which gurantees housing loans, and labels it, "a shocking snippet":
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You can't trust anyone, or any institution, who doesn't have capital on the line--who stands to lose no standard of living if things go south. Is it any wonder things in the mortgage market bacame the house of cards as it did?
ReplyDeleteDid any of the actors, governmental or private, fear becoming a pauper, losing their own home, or burning their kids college education fund? If that responsibility hadn't been socialized away, we might have had a different result.
It's becoming more and more clear that originators and underwriters had little fear of failure--they were playing with other peoples money.
A true free market, without any hope of government rescue, could cure a lot of ills and put responsibility back into home lending.