Today, Rep. Watt (D. NC), the incoming FHA director admitted the housing bubble was orchestrated by the Federal Government, and even after the disastrous housing collapse, he and Pres. Obama want to “roll the dice” some more. That is the logical conclusion to draw from Watt’s declaration that irresponsible lending standards will remain the rule.
To most of Washington, both GOP and Dem, houses are not objects to be purchased by families who can afford them. Rather houses are tools for social engineering. Deemed a prima-face and incorruptible good, home ownership was promoted for all without considering that they are expensive and require a long term commitment. Franklin Raines amassed an alleged $90MM fortune lobbying the government to lend to anyone with a pulse, and the likes of Rep. Frank was happy to comply. The government balance sheet was insolvent at the crash, and it has only become worse. FHA mortgage insurance is now a Ponzi scheme where if it were privately administered, its CEO would flee to a nation without extradition.
Believe in minor miracles, the CFPB clamped down on reckless lending at the public expense. Buyers with imperfect credit would pay more, and everyone would have to make a down payment. Banks were still free to lend as they wished with their own money, but government guarantees were no long available to anyone with a pulse – a mere five years after the housing collapse.
Pres. Obama has never courted the buzz-kill title, so this uncharacteristic act of responsibility did not stand. Fresh off of Sen. Reid’s nuclear option, Watt was confirmed. A member of the Congressional Progressive Caucus (read socialist), Watt was previously an attorney specializing in suing anyone who only lent money on the basis of who could pay it back. In short, Watt is comfortable with the idea that money is to be shared. The lending reforms did not last even a day, as Watt announced before taking office that the loose lending standards would continue.
Even the tiniest reforms cannot withstand the onslaught of Obama’s socialist army. Even now, Fannie Mae’s collapse’s total cost is unknown, yet Obama will not relent until he forces another crisis. AG Holder can fine JP Morgan all the tea in China, but when the government allows unworthy people to buy houses with 2% down, there will be a bubble and eventual collapse.
The crisis of 2008, upon which Obama glided into office, is being recreated thanks to radical socialists like Rep. Watt. This time, however, look for the banks to steer clear of buying impaired bond portfolios. Having been blamed, prosecuted, and fined for bailing out the government five years ago, the next crisis will rest solely upon Washington.