Wednesday, June 24, 2009

You don't even have to study history not to repeat this mistake

Reuters is reporting that Representatives Barney Frank, the chairman of the House Financial Services Committee, and Anthony Weiner want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums. They feel the current guidelines are causing housing to sell too slowly, thus prolonging the economic slump.

Even Barney Frank can't be quite that stupid. This crisis arose from government intervention, and government intervention will prolong it. Making lending easier after the .com crash led to the housing bubble. Lending organizations were also forced to make loans they knew they shouldn't or face accusations of redlining and racism. That is, had market forces not been interfered with, most of this wouldn't happened.

I sincerely hope Fannie and Freddie don't give in to Frank, but suspect they won't have much choice.


James Dimmitt said...

Bawney Fwaynks is weawwy smawt. Why down't we juwst weave him awone so he can wuin de ecownomee in peace?

Andrew said...

Hah! Sad, isn't it? His goal is to siphon money to his friends (and probably post Congressional job) in Fannie Mae and Freddie Mac. That and increasing his personal power, of course.