There are many “explanations” for the cause of the 2008 financial crash. Nearly all focus on the oversold housing bubble and the many buyers who had purchased homes they could not afford. Who to blame? Who to blame? My explanation is found here.
However, no one who believed they had figured out to whom this “blame” should be attributed thought giving huge loans to people with near zero down payments and NO MONEY was a good idea. The progressive/statist/altruist notion that we must make home ownership more affordable for the less fortunate sounds… well, “nice.” But the manner in which this was done led, in my opinion, to the housing collapse of 2008.
One would think that it was a mistake we should not repeat. But, progressive/statist/ altruists always believe “if we just spent more or persisted longer or gave away more money” this idiotic notion would WORK! And, indeed, they are back at it.
This time around they are going after FICO scoring (a person’s credit score calculated with software from Fair Isaac Corporation (FICO)). I am confident that all of my readers know what a FICO score is. Many probably have their personal FICO score memorized. And, I am also confident that none of my readers would loan money to a stranger with an abysmal FICO score. Ah, but not progressive/statist/altruists. They want to loan money to strangers with an abysmal FICO score – just not their own money. They want you to do it and back it up with your taxes.
[Source: Now Obama Bank Regulators Scheming To Degrade Mortgage Credit Scoring, Investors Business Daily editorial]
Subprime 2.0: In an orchestrated assault on the credit standards underpinning mortgages, no fewer than four Obama agencies have gone to war against FICO.
Our President believes FICO scoring as too mean-spirited. These scores make it difficult for people who have NO MONEY to buy nice houses. Really! How could our nation possibly be more “unfair?”
FICO scores cut off millions of low-income minorities and immigrants from mortgages. What to do? What to do? I know (light bulb above head)! Let’s pressure Fannie and Freddie, which control 90% of the mortgage market, like we did last time, and reset the underwriting standards for the entire mortgage industry. Let us abandon FICO for a nicer, softer, less rigid standard.
Obama’s regulators are now instructed to look favorably on “nontraditional credit” like rent and utility payments. These regulators are not to look at studies that show these types of standards to have little value in predicting default risk.
But, according to our good-hearted, well-meaning progressive/statist/altruist friends, the national goal should be to inflate credit grades by the end of 2016 and socially promote an estimated 50 million deadbeats and unbanked, unscorable immigrants from the rental market to the mortgage market.
God save us from the “nice” people!