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(Financial Crisis) Relax the underwriting standards again? Haven’t we learned from our mistakes?

Posted by TopOfTheThread on July 21, 2011

A few weeks ago, an article popped up on Yahoo regarding relaxing the underwriting standards of lenders.

Haven’t we learned from our mistakes?

Let’s take a look back…

House Financial Services Committee hearing, Sept. 25, 2003: (See http://online.wsj.com/article/SB122290574391296381.html)

Rep. Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . . More..

Rep. Frank (D. Mass) contributed to banks lending to people unqualified to pay back their loans…. and the resulting mess.

Take a quick peek at this short video.    He couldn’t have been more off base.

And we all know this contributed to crash of our economy… Unqualified people getting mortgages. NOW we’re asking banks to loosen lending standards… Again?

From Yahoo and Investors Business Daily ( Friday July 8, 2011, 6:51 pm EDT)

In what could be a repeat of the easy-lending cycle that led to the housing crisis, the Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, according to court documents reviewed by IBD.  More…

Wow. I hope I am missing something here.  Relax the underwriting standards?  That’s one of the ways we got in trouble last time, right?

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