NOW TO FINISH UP

Finish the sentence: "If you can't afford to buy a house..."

There are two possible completions to that sentence in America today.

The first is: "...don't buy it."

It's the principle of delayed gratification.

Work and save until you can afford to make a down payment, as well as the monthly morgtage payments.

That's the way my grandparents did it.

That's the way my parents did it.

That's the way I've done it.

Work and save...work and save...work and save.

The other answer is one that has been put forth by the government for thirty-three years:

"If you can't afford to buy a house, we won't look at your credit rating, we won't require a down payment, we won't make you pay any principle for three years, and we'll give you a below market interest rate (called a sub-prime mortgage)."

There are two reasons the government did that: 1) because they wanted to promote the idea that everyone deserves the "American Dream;" 2) That will make you like us and will help get us re-elected.

The first is patently false. Everyone does NOT deserve the "American Dream."

Everyone deserves to get educated, work hard and have an opportunity to reach for the "American Dream," But NOT everyone deserves it just because he/she exists.

Nevertheless, the governmnent said to lenders (banks and others): YOU MUST PROVIDE MORTGAGES TO PEOPLE WHO CANNOT JUSTIFY HAVING ONE...BUT DON'T WORRY, WE'LL GUARANTEE THE PAYMENT OF THOSE MORTGAGES IF THE PEOPLE CAN'T KEEP UP WITH THE PAYMENTS.

Lenders responded in the way they had to, as dictated by the government and by their responsibilities to their share-holders, for whom they had a feduciary resonsibility: they established the mortgages.

They were not surprised when people started defaulting on their mortgages, but they did not worry, because they had the full faith and credit of the government of the United States of America behind them, and could not possible lose money on the deal, so it did not matter.

The ones who were surprised were the federal government, especially the likes of Barney Frank, Chris Dodd, Maxine Waters, Charlie Rangel and others, who repeatedly stated that there was no problem with loan backers, Freddie Mack and Fannie Mae, as well as others involved on the government's side of the deal.

Barney, Chris, Maxine, Charlie and friends insisted over and over again that those who were objecting to the LACK OF GOVERNMENT REGULATION which THEY had instituted were nothing more than fear-mongers who just wanted to say, "NO!"

Then, when defaults on mortgages started snow-balling out of control, Barney, Chris, Maxine, Charlie and friends moved to the head of the "we need more government regulation" line.

See, the colapse of the economy in America came about, not because of the failed policies of any one president (especially not because of George W. Bush), but because of a series of very bad decisions by congress, whose unintended consequences were unforseen.

So, the next time you hear Presdient BO state that he inherited this economic mess, remind yourself that it was HIS party that instituted the Community Reinvestment Act of 1977 which ultimately led to the economic colapse we're now experiencing.

The Community Reinvestment Act of 1977 tried to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods. The Act mandated that all banking institutions that receive FDIC insurance be evaluated by Federal banking agencies to determine if the bank offerd credit [in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)] in all communities in which they are chartered to do business.

The last part of that mandate [Section 802 (b) and Section 804(1)] was eventually ignored because it resulted in "too few" sub-prime loans being made.

The idea may have had smatterings of nobility about it, but it was ill-conceived, ill-planned, ill-implemented and had dire consequences.

The result was not too few sub-prime loans being made, but too many.

But the answer will not lie in placing blame.

The answer will lie in ridding ourselves of these whale-sized loans to people who cannot make ant-sized mortgage payments and allow the market to self-stableize over what will be a very long and painful time.

The lesson should be: Things done for the purpose of re-election should not be done unless the perpetrator(s) have some viable, sure way to determine the possible unpleasant side effects on the country and then to avoid those side effects.

What other unintended consequences might we expect from the decisions made by our government?

Make a list in the comments section.