amdx wrote:

"Paul Hovnanian P.E." wrote in message
...

[snip]


What Clinton pushed for was a form of deregulation. In other words,
relax (or eliminate) the rules. The sitting GOP-run Congress, and the
impending Bush administration also have knee jerk reactions to regulation.

But the mortgage lenders would have protected themselves (with or without
regulation) if they didn't have the government-sponsored enterprises (GSEs)
to buy the paper.

They would have protected themselves if there were no GSEs around to buy
the risk. But given the political pressure to relax the standards on
what they (the GSEs) were willing to buy, someone (with fiscally
conservative leanings) should have pushed for audits to ensure that the
paper being written actually reflected the underlying risk.

If you want to buy loans from people with no known income on 100% of
some iffy property, fine. Just make sure that's what it says on the
contract so when we buy the paper, we know what we're getting.

One thing to consider: If we do hand the financial sector $700 bn to
cover damages, what sort of assurances are we buying that it doesn't
happen again? Like SEC regulation (and accompanying audits) of all
securities that banks are allowed to declare as assets for the purpose
of capital requirements. And getting all that paper off the OTC market
and into a (regulated) market/clearinghouse. That way, the next person
to write a 'liar loan' will be making a misrepresentation to the
government, which (as Martha Stewart knows) is a felony.

--
Paul Hovnanian
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Have gnu, will travel.