Forget Obama, Fear Bernanke Now!
Fed Chair Proposes Anti-Market Measures To Address Mortgage Crisis
Ben Bernanke encouraged the nation’s bankers to write down the principal on millions of mortgage loans. Voluntary loan modifications aren’t doing enough to stop foreclosures, declared the chief steward of the U.S. financial system. “In this environment,” he said, “principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.”
Only the day before Mr. Bernanke dropped his bomb, Treasury Secretary Hank Paulson disclosed that “since July more than one million struggling homeowners received a workout—either a loan modification or a repayment plan that helped them avoid foreclosure.” In January alone, there were 167,000 such modifications, with the number of borrowers receiving help rising faster than the number of foreclosures.
This banking and mortgage crisis was caused by lenders giving loaning money to people that were not credit-worthy, and those un-credit-worthy people accepting that money. If blame has to be divvied out, the lenders that made the poor business decisions to lend the money are 75% to blame, and the people that accepted the money are 25% to blame cause they most likely knew they could not afford to pay it back.
But Bernanke’s “solution” will drive investors away from the bond market’s that keep the mortgage business afloat.
We knew Bernanke was no Greenspan, but who knew he was out to destroy both personal finance responsibility and an entire sector of the economy?
