...appears to be Barack Hussein Obama's modus operandi:
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.
Let's leave aside that the cause of the 2008 crash was a rash of unwise mortgage lending forced upon lenders by the Community Reinvestment Act. Let's leave aside that the federal government has exhibited absolutely no ability to separate creditworthy entities from unworthy ones. And let's leave aside that the federal government can't balance its own books, nor are its masters willing to consider any method of doing so. This proposal is redistribution, with the Treasury and the FHA as the middlemen. Nothing more and nothing less.
A borrower with weak credit represents a risk of default greater than a borrower with good credit. A lender that weakens its creditworthiness requirements is accepting systematically increased risks. Lenders that do so beyond a certain point are inevitably driven into bankruptcy by the quantity of defaulted loans they must write off. There is no escape...unless some other, larger and richer institution guarantees them against loss.
But for Smith to guarantee Jones against loss is a promise that Smith will make any such losses good out of his own pocket. In receipt of such a guarantee, Jones sees "nothing but upside:" no material risk to himself regardless of his behavior.
In this case, Jones is the mortgage-lending industry, and Smith is the taxpaying public.
I won't speak for any of you, sports fans, but I have no interest in guaranteeing the mortgage-lending institutions of America, every last one of which is way richer than I am, against further losses due to more bad mortgages. We've been there and done that; we're living in the sort of tight-credit / trust-deficient / low-confidence economy that results from such madness.
But to Obama, it's quite all right. It's not his money, so why should he worry about it? The Fed will buy as many T-bills as he needs to sell to pay off any losses. Besides, if the policy comes a-cropper, he can always take another vacation to forget about it. Perhaps a month on Martha's Vineyard would do the trick. Come back smiling, make a few more speeches about those eeeeevil Republicans and how they're obstructing the recovery with all their talk about fiscal responsibility and limiting government spending, and all will be well.
I recall a lapel button from my younger days that read "I Used To Be Disgusted, Now I'm Just Amused." I passed through the outer boundaries of "amused" long ago. At this point I'm just waiting for the collapse, which has become inevitable, so I can exercise an old crank's last pleasure: smirking, waving a finger, and saying "I told you so."