AEIdeas

The public policy blog of the American Enterprise Institute

Subscribe to the blog

Discussion: (7 comments)

  1. Vic Volpe

    Alan Greenspan had all the authority within the Fed to regulate unsafe lending practices with regard to home mortgages by regulated financial institutions (and the SEC had the authority with regard to the shadow banking system) — when regulators fail to regulate, or don’t believe in Government regulation and so do not regulate, we can see the results. Passing this authority to anotherr agency achieves nothing. What is regrettable is that several yeas later, even afte Dodd-Frank, we still have the same financial system and we are back to business as usual.

  2. MacDaddyWatch

    When the disciplines of time-tested lending criteria were displaced by an aggressive government social agenda, the ball game was over. Millions of perfectly good renters became millions of horrible owners and the rest is history.

    1. Max Planck

      “When the disciplines of time-tested lending criteria were displaced by an aggressive government social agenda, the ball game was over. Millions of perfectly good renters became millions of horrible owners and the rest is history.”

      You’ll go to your grave believing this bullsh*t. Help yourself.

  3. Max Planck

    “Hence, if it turns out that the borrower cannot afford a loan, the presumption is that the lender was either not careful enough in explaining it or was reckless in providing it in the first place.”

    That’s right, Peter. Because in the normal course of events, it is up to the CREDIT GRANTOR, not the applicant, to deternine the creditworthiness of the borrower.

    While I have issues with the new rules at first blush, your complaint reeks of the total ignorance you have brought to this subject. You never had any business commenting on mortgage lending by training or temperament, as the saying goes.

    1. In the original ‘normal course’ of events, the lender did manual underwriting and made a determination as to whether or not the person asking for a loan was (a) able to repay the loan (assets/income) and (b) trustworthy enough to repay the loan (risk). If both (a) and (b) were met, then Party A and Party B entered into a binding legal document that laid out the terms and the repayment of the loan. If Party B couldn’t meet the terms of the contract, Party A acted according to the contract.

      Then the Government came along. They sure fixed that problem, didn’t they.

      1. Max Planck

        “In the original ‘normal course’ of events, the lender did manual underwriting and made a determination as to whether or not the person asking for a loan was (a) able to repay the loan (assets/income) and (b) trustworthy enough to repay the loan (risk). If both (a) and (b) were met, then Party A and Party B entered into a binding legal document that laid out the terms and the repayment of the loan. If Party B couldn’t meet the terms of the contract, Party A acted according to the contract.

        Then the Government came along. They sure fixed that problem, didn’t they.”

        The problems weren’t caused by switching to automated underwriting. Anyone who tells you that is lying.

  4. Todd Mason

    Was the shadow banking system reckless?

    Here is Peter’s favorite journalist with an example:

    http://money.cnn.com/2007/10/15/markets/junk_mortgages.fortune/index.htm

Comments are closed.

Sort By:

Refine Content:

Scholar

Additional Keywords:

Refine Results

or to save searches.

Open
Refine Content