We need one to fix the housing problems made worse by this government program:

In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending.

Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more “affordable” loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.

Housing experts and some congressional leaders now view those decisions as mistakes that contributed to an escalation of subprime lending that is roiling the U.S. economy.

The more you learn about finance the stinkier it looks. Not one scandal but an infinite number of interlocking scandals, like looking at a mirror in the mirror.

George Bush was a big proponent of home ownership as a path for upward mobility into the middle class. Before I cast more stones I thought that a terrific idea too. Maybe it was, but of course, subprime loans don’t really promote home ownership, that’s the rub.

All the wondrous bailouts and incentives seem more aimed at shoring up the creaking finance and banking industry than you and I, including the Fed rate itself, which may or may not translate into savings for homeowners. So far, not the way it is going.

On the news last night (CBS), the majority of foreclosures being averted by hot lines and counseling are not by readjusting the loan rate but simply helping the homeowner consolidate or handle existing debts.

The reason they don’t put the hammer down on subprimes, or more important, force banks to readjust loan rates to something reasonable, is I’m guessing:

1) the banks need that income to offset their loan losses;
2) securitized mortgages present a legal tangle and murky paper trail;
3) it’s an election year and there is no appetite for taking on tough contreversial issues (not that next year will be any different);
4) everything is going according to plan; after real estate gets knocked down to the basement future investors will make a killing as it rises back out of the ashes like a phoenix;
5) no one gives a d@$%# about homeowners, particularly those few stupid enough to think they could get something for nothing.

Take your pick.

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