They know they have a problem, and they still have no idea how to solve it:
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
Because the banks have proven to be such trustworthy and reliable lenders up to now.
Seriously, though, it would have nice---wouldn't it?---if they'd felt this same sense of urgency a few years ago when the banks were forging mortgage documents and stealing people's homes.
Okay, snark aside, you would think by now they would have realized that one of the underlying causes of our ongoing malaise is that our private-sector economy has over-relied for years on consumer spending and household debt---and not enough on, say, capital/wage formation---to drive growth. Incentivizing people to assume more debt, and banks to lend more money, when wages have been stagnating for the last 30 years is one of the reasons how we got into this mess in the first place! If they want to stimulate the economy by growing the construction sector, this----not housing---is what they need to be spending the taxpayers' money on, not insuring more toxic loans for banks to securitize and peddle to investors as AAA-rated gold. Otherwise they're just relying on the same casino capitalism that crashed the economy five years ago, and which will continue to crash it again and again until it is replaced by a more balanced and sustainable model.
Put another way: If too many people can't afford to buy stuff, then give them more money and raise their living standards, and don't make it easier for them to go bankrupt.
---Baron V
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