In the Looney Tunes cartoons, Wile E Coyote (Super Genius) gets a ton of laughs by concocting various schemes he thinks will help him capture the elusive Road Runner--but usually just end up with him falling off a cliff, getting blown up or crushed by a falling boulder. What's not so funny is watching President Barack Obama (Super Genius) concoct the same schemes he thinks will help him turn the economy around--but will only result in us (the taxPAYERS) falling off a fiscal cliff, blowing up the economy and getting crushed by more debt.
Consider the latest push by the Obama Administration to pressure lenders into giving mortgages to people with poor credit records. In case you didn't hear, the housing market is "rebounding strongly". Or at least it is for those who exercised proper fiscal restraint before the market collapse (by not over-borrowing, over-buying and over-extending themselves). These folks are finding great bargains left behind by those who chose to purchase homes through the "no money down/interest only/jumbo/balloon" mortgages that those with poor credit or not enough income to buy a house used to get into the market back in the early 2000's.
That doesn't sit well with the President, who can't stand to see those who act responsibly get ahead of those don't. There is "housing inequality" developing in our society, and somebody (the Government) needs to step in and make sure that doesn't happen. So that is why the President lowered the credit rating required to qualify for Federal Housing Authority loans (going as low as 500). The only problem is, banks--many of whom are seeing the same people who defaulted on their previous mortgages applying for loans once again--are saying "No Way".
You may recall these bankers being called to testify before Congressional Committees and getting grilled by lawmakers who had pressured them in the past to make loans to higher risk borrowers (that would be you, Former Senator Chris Dodd and Former Congressman Barney Frank) as to why they gave loans to people whom they knew would likely never pay them back--based on their poor credit records and low incomes. So how excited would you be as a lender to give MORE money to those very same people?
What really kills me is that the Obama Administration is getting the Justice Department to "pinky swear" to these lenders that if they give out the high-risk mortgages--and we get another big round of foreclosures--the bankers won't face legal action THIS TIME AROUND. Could you imagine if the Administration told General Motors "Don't worry about making sure the engine doesn't catch fire in the Volt--because we need more people driving electric cars. And if they do catch on fire, we won't hold you responsible"? Oh, and did I mention that these new high-risk mortgages will be backed by the FHA? So if these borrowers do decide to just "walk away" from their obligations like so many did at the end of the last decade, it will be "OK" because Mr and Mrs Paying Their Mortgage And Their Taxes will just pick up the tab.
The beeping sound you hear in the distance isn't the Road Runner. It's the Acme truck backing up to the White House to deliver another shipment of disaster in a box.