Congress Wants This Bubble, Not Reform
The gut-less US congress will be remembered for it's role in creating the housing bubble. It appears that the lack of courage will continue as the economy sails off the cliff. "Legislation to be debated Wednesday to overhaul regulation of Fannie Mae and Freddie Mac has been changed to allow the mortgage giants to buy higher-cost loans in pricey markets."
"It would also allow Fannie and Freddie to increase the percentage of the secondary mortgage market that they serve, challenging competitors who now operate in the so-called nonconforming market."
This blog has criticized the supposed 'independent' Federal Reserve for it's failure to take away the punch-bowl. But there is no question the elected representatives have failed us miserably as well. How can they ratchet up the borrowing at a time like this?
"Some lawmakers are reluctant to curb the holdings because they create liquidity in the mortgage market. 'The last thing any lawmaker wants to be accused of is killing the goose that laid the golden egg in our housing market,'" said Jaret Seiberg.