Dienstag, Juni 24, 2008

Yet More Unintended Consequences...

If you read here, you should know that the subprime crisis was a politically-made crisis, driven by the legal requirement to make sub-prime loans in the name of that mythical beast, Fairness.

Thank you, ACORN, thank you...

What is particularly galling is that ACORN is using the beast that they created to ride to greater glory. Here they rail about the predatory financiers and about the massive upswing in subprime loans - the beast that they themselves created - that "unfairly" impact minorities, the elderly and po' folks.

But this wasn't the original point...

This link shows that the real problem facing the mortgage originators, when they are banks, is that they may enter into non-compliance in terms of their sub-prime responsibilties (see this for what I mean here), as the number of sub-prime loans has declined significantly:

Subprime loans fell to 3.1% of originations in the fourth quarter of 2007, from 20% in 2005 and 2006.


Lots of banks not gonna be making subprime loans for the near-term, and that means, theoretically, that in three years these banks will be in non-compliance, driving them effectively out of the mortgage business.

Unintended consequences from a bunch of activists who are now using the monster that they themselves created - from an ignorance of rather basic economics and financing - to further their own cause.

How often do these folks meet themselves coming around a corner?

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