Jul 14 2008 3:11PM | Permalink | Email this | Comments (0) |
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I'm not going to spend a lot of time writing about the issues going on with Fannie Mae, Freddie Mac and the Fed's new mortgage rules today, because you can find plenty of places to read about that (CNN, CNBC, Bloomberg, to name a few), but I did want to direct you to one of the best takes on the issue I've seen today, from Andrew Leonard in Salon's How the World Works blog. Here he's talking about the part of the new rules that "prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value." (but I'd recommend reading the entire post.)

Ponder that sentence for a moment.

The Federal Reserve has decided it must order lenders not to make loans that they should not make. ... 

What's most amazing is that lenders have to be instructed in such a basic economic principle in the first place. This is what we have been reduced to: The government telling the "free market": Don't be a friggin' idiot.

I couldn't have said it better myself. (He also talks about Alan Greenspan's role in this mess, which we wrote about earlier this year in our article on the 10 Most Influential People in remodeling.)