Lessons unlearned

Jumbo lending: lessons unlearned:

Thanks to Sen. Christopher Dodd, Rep. Barney Frank and others, the lending industry spent years issuing mortgages to millions of Americans who had no hope of repaying. Sen. Dodd and Rep. Frank believe homeownership is a right unfettered by income or credit history, and over time, they were instrumental in forcing the industry to lend to some of the least creditworthy Americans.

As everyone knows, the results were disastrous….

Lesson learned? Don’t be silly. In December, GMAC got $5 billion from the government’s $17.9 billion bailout of the domestic auto industry, which Sen. Dodd supported, and immediately lowered its lending standards. No longer would buyers need a credit rating of 700 or higher. Now, people qualify with scores as low as 621, which is 2 points above “poor” and 102 points below America’s median. As columnist George Will put it, GMAC is using taxpayers’ dollars (more accurately, money borrowed against tax receipts far into the future) to issue subprime loans.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: