No Runny Eggs

Repeating the same action and expecting a different outcome is a satirical definition for insanity.  Unfortunately, it is also the definition for many government endeavors…but I repeat myself.

A contributing factor to the economic freefall that we’ve experienced the past two years, is that mortgage companies and mortgage originators, were being leveraged by the Federal government to provide home loans to people who weren’t able to repay them.  Under the guise of a “chicken in every pot” and a “house for every family,” banks were rated on how well they served the low income communities in terms of providing mortgages.  If the banks didn’t rate well, i.e. didn’t make the loans that wouldn’t get paid back, the government could retaliate by keeping them from other programs or denying a merger request.   The result was that many of these loans were those that were part of the real estate collapse which triggered our downturn.

Today’s  USAtoday is reporting that the Treasury Department is now using the FDIC’s former bag of tricks.

The Treasury Department plans to rate mortgage companies on how they treat customers as part of the Obama administration’s $75 billion foreclosure relief effort. The report, which will measure how each company handles borrowers, is expected by July, Treasury Secretary Timothy Geithner said.

Oh, boy, here we go again!  It doesn’t matter whether the decisions are made on solid history and financial grounds, the only measurement will be “how they handle borrowers.”  In other words, if you don’t extend the loan, regardless of the financial situation or capacity of the borrower, you’re toast!

If you thought we were past the housing mess, we’re not!  All we’re doing is queuing it up for another bag of crap at another future date!