10 June 2008

Government Intervention A Big Part of the Mortgage Mess

Shocking. Anyone still not see how the government causes more problems than it cures? Of course the policies were set in place with the best of intention in mind, that being to help those who were financially borderline for a solid loan to attain one...at high risk. The government took a big gamble with our tax dollar, again, for a purpose that had honorable intentions (that being to help out lower income families), and lost big for us by exposing tax dollars to an unacceptable level of risk that the vast majority of responsible, free market companies wouldn't touch. The result:

The agency neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending. Subprime loans are targeted toward borrowers with poor credit, and they generally carry higher interest rates than conventional loans.

So to reiterate, the government backed agencies decided to take higher risks with tax payer dollars, seeking to increase their own revenue, and now, not only have we lost the tax dollars used to purchase these loans, subsequently, liberal members of Congress are looking to take even more tax dollars from us to "fix" the problem. You can see where this is going. How are these lessons lost on our so called leaders? Despite the intentions of central planners to assist people, it was greed on the government level and the lack of accountability that lead the vast majorities in the first place, and instead of helping a small percentage of the population, they hurt the vast majority of the population instead.


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