Thursday, July 22, 2010

No Home for You

Embolden by the passage of legislation that will crush the banking industry, the Obama administration is moving further into state control of individual credit decisions.

The level of paternalism is simply amazing. As the Post writes, the Administration is taking it upon itself to decide “who should own a home and what the government should to do to support them.” What is even more surprising is that the people arguing for barriers are the same ones who just a few years ago were pounding on lenders to loosen underwriting standards.

Each borrower has a unique financial profile, and no government-mandated lending standards could ever address those adequately. People, as well as banks, must be allowed to seek credit and make credit decisions in accordance with their own situations, and, yes, allowed to fail in the event they make the wrong decision. This latest initiative is, like so many of these financial “reform” initiatives, nothing more than an attempt by politicians to appear responsive to the credit meltdown when, in fact, the market long ago corrected itself and will adequately balance credit risks and benefits going forward.

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