Banks Investigated for Mortgage Excesses
Last week President Obama announced a new task force to investigate abuses related to the origination and securitization of mortgages during the housing bubble: “I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis.”
One problem I have with this is that many of the “excesses” that the Obama Administration wants to investigate are excesses encouraged by the Federal Government, in order to get more poor people into housing through packaging subprime mortgages on the theory that either they will rise to making the payments†, or the house will be lost–but to no loss to the bank, since housing prices keep going up.
The problem I have is that one of the biggest instigators of the mortgage lending fiasco is the Federal Government–and they (a) have sovereign immunity, and (2) are the ones doing the investigation.
† They couldn’t, and the ARM resets are still resetting…