Congress Debates Lending Reform
A: Nothing new here, just passing on the latest. As you know, the Fed is holding a hearing on May 14th to discuss placing standards on the lending industry to prevent abusive lending tactics. This is in addition to that meeting.
Congress is looking at potential reforms to risky home lending practices, but a Tuesday hearing at a House subcommittee suggested many lawmakers are still sorting out the complex workings of the mortgage market -- and some are unsure whether reforms will necessary in the short term. "There is a very complicated web of contributors to this issue that makes it very difficult and unwieldy to unwind," said Rep. Melvin Watt, D-N.C...My last post discussed how the fed is meeting next week to discuss this very same issue to protect the consumer. Problem is, as Congressman Watt said, if you push in one place, it just comes out somewhere else. In this case, if they enact lending reform, fewer buyers will be able to afford a home and that could be disastrous to the national housing slump already searching for a bottom.Watt and other committee members said Congress needs to be careful about unintended consequences of potential reforms.
"It's kind of like the Pillsbury dough boy," Watt said. "If you push in one place, it juts out someplace somewhere else."
Rep. Carolyn Maloney, D-N.Y., the subcommittee's chairwoman, did not say whether legislation is needed, but suggested that it could be necessary.
"This committee is by no means waiting for the private sector to do what it thinks is right to solve this rapidly growing crisis," she said.
Market forces are working right now as companies are self-correcting a major part of the problem in the face of the hole they dug for themselves. The question that remains is whether or not the federal government feels the need to step in and regulate. Time will tell but speculative investors and homeowners looking to sell soon are certainly hoping for NO REGULATION! In their eyes, we need as many options available for potential home buyers so that affordability stays high enough to pay asking prices!
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