Let’s not make the same mistakes twice
Where is Ronald Reagan when we need him? The two-term president famously quipped, “There you go again” to then-president Jimmy Carter in 1980 debate.
We had a sense of déjà vu Wednesday after reading a report from The Washington Post regarding the Obama Administration’s plans to loosen up lending on homebuyers with less than ideal credit.
Has it been so terribly long that the craziness of the Great Recession of 2008 has slipped from our collective minds?
An overly inflated housing market is what got us into the financial mess in the first place. Prior to 2008, some bankers were convinced that home values could never fall, so it was OK to sell people houses they couldn’t afford because they could just refinance them later when the house was worth more.
Despite a recent surge in the housing market, the growth isn’t enough for the White House. The administration is urging banks to loosen up their standards and begin lending to buyers with lower credit scores.
People with good, but not great credit, administration officials indicate, are being left behind the housing surge.
But that’s not entirely true. The Federal Housing Administration, which insures the vast majority of mortgages in America, already has pretty loose standards for buyers of meager means.
FHA borrowers can get a loan with a credit score as low as 500 — which are pretty bad — and a down payment as small as 3.5 percent.
The federal government would be wise to simply shut up and let the markets slowly recover. Starting to change the rules again can have bad consequences.
The country should learn from its past mistakes, not relive them.