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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Wyätt Gwyön who wrote (15820)6/24/2004 7:02:14 PM
From: patron_anejo_por_favor  Read Replies (4) of 110194
 
<<basically, it seems the goal of credit pimps in the environment of incredibly irresponsible Federal "oversight" is to give consumers maximum rope with which to hang themselves, financially speaking.>>

I agree...and incentives are slanted to reward financial institutions through this behavior. The "lenders" (and I use the term loosely) are protected through the secondary mortgage market, wherein the vast majority of the loans are sold to FNM (who is in turn protected by the implicit government guarantee). They have little incentive to act as prudent bankers (indeed, the less prudent, the greater the reward). If the loans go bad, the taxpayers will hold the bag in the form of a bailout of the GSE's (the model for all this is the S&L bailout, which we are now trying to mimic on a much grander scale). So the benefits are privatized and the liabilities are socialized to the greatest extent possible. In this way the transfer of wealth (from taxpayer to financial intermediary corporate insider/large shareholder) can be accelerated. And Congress is about to pass a law allowing FNM to buy zero down mortgages in soize! Watch yer back taxpayers.....RealMan approacheth from the rear!<NG>
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