In the aftermath of the financial sector collapse, our nation’s political leaders have worked long and hard to heap all of the blame for that collapse on some imagined cabal of greedy bankers. To hear the politicians tell it, the financial collapse was the result of banks taking advantage of subprime borrowers by, uh, giving them loans that they probably couldn’t pay back. Something that ultimately lost money for the banks.
Keep in mind that the banks didn’t make their money until the government bailed them out.
Now that push to demonize bankers has manifested itself in perhaps the most absurd way to date. According to new Federal Reserve policies, home loan originators must register in a manner not at all unlike sex predators.
Mortgage loan originators will have to be fingerprinted and sign up to a central registry to do business in future, according to final rules issued on Wednesday by the Federal Reserve and other regulators.
The rules are part of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, also called the S.A.F.E. Act.
They were issued by the Fed, Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision, Farm Credit Administration and National Credit Union Administration.
Mortgage brokers came under tough scrutiny in the wake of the 2007-09 financial crisis, with some lawmakers and regulators sharply critical of underwriting standards and practices that were seen as so loose they helped foster a housing price bubble.
The S.A.F.E. Act specifies that mortgage brokers who are employees of agency-regulated institutions must register with the Nationwide Mortgage Licensing System and Registry,
“As part of this registration process, residential mortgage loan originators must furnish to the registry information and fingerprints for background checks,” a joint release from regulators said.
I could tell you about the tax dollars this is going to cost that our federal government doesn’t have. I could gripe about the additional expense this will present for lenders that will ultimately be passed on to we, their customers. But what really ticks me off the most about this is the idea that these lenders have to register as though they were criminals while our government, which enabled the financial sector collapse, takes none of the blame for that collapse.
Banks didn’t extend credit and make subprime loans to people who couldn’t afford them because that was a profitable practice. They did that because they were threatened with lawsuits and adverse regulatory actions if they didn’t do it. And they were promised bailouts if they did make the loans and extend the credit.
The financial sector collapse wasn’t capitalism run amok. The capitalists themselves don’t need to start registering like sex offenders. The government needs to stop manipulating the credit marks.
Left on their own, banks generally don’t make loans to people who can’t afford them.