I know this....the era of obummer with all the strict banking regs was beyond ridiculous. That is, in large measure, the very reason the economy was stagnant for 8 years. Banks, and other lenders have to be given some freedom to take some risks. Well, actually, in some cases there was practically no risk and still the bank couldn't finance the venture, due to the yoke of the stupid regulations.
The Volcker Rules bars making "risky bets," you say? Hmmm...define "risky."
Yep, that's what I thought...
Point is, such decisions have got to be left to the lending institutions. Yeah, I understand those "risks" and because of that, I support limited guarantees. In fact, I have no problem making the lenders purchase private insurance to cover such "risks." Some, if not all, of that cost (the premiums) can be built into the cost of the loan to the borrower. This is done now re: SBA and USDA guaranteed loans. The borrower pays a little extra monthly to cover the guarantee, which is the same as an insurance policy for the lender.
So, wow! ya mean that TWO taxpayer-funded federal agencies can engage in some "risky" lending because of an insurance policy, yet the obummer administration issued EO's forbidding private lenders to utilize the exact same provision in loans not involving direct taxpayer funds!? Nope! again, obummer and his ilk were all about one thing, and one thing only, destroying America by destroying its institutions. Certainly the private banking industry is evil and must be destroyed!
And, I noticed you side-stepped the root cause of the mortgage crisis. Of course you did. Allow me to remind everyone, in this very brief historic overview...
Carter first issued an EO during his term that made such risky mortgages possible. No one acted on it, as it was strictly voluntary.
Klinton strengthened that policy, in 1996 I think it was, actually requiring lenders to build into their loan portfolios a percentage of such loans. But, there was "no teeth" in the order. No enforcement provision. So, lenders smartly said again....no thanks.
In 2002 Congress...the 'craps, led by Maxine Waters (that should have been a red flag that this was a stupid idea) held hearings and attacked lenders, big banks and others for being racists since minorities were under-represented in securing home loans. There were threats of monetary fines and penalties. The lenders decided that risk, of fines, was less than actually making stupid loans.
In 2004, Waters and her goofy gang, now joined by the junior senator from Illinois, obummer, were back for another round of hearings. This time, instead of wielding a stick, they presented a carrot. Go ahead and make risky loans (subprime) and if they default, the guvmint will bail you out. Freddie and Fannie had their charters altered, thanks in part to a Congressional edict, that would now allow them to support subprime lending. Bam! the genie was out of the bottle. The bankers said, "Let me get this straight. We can make loans to anyone and everyone, collect all those fees associated with making loans, and all those loans that default, you, Ms. Waters, and the Fed guvmint, will reimburse us for our losses?" YES! said Ms. Waters, now go out and make home loans!!!
Hello!