Barney Frank wants changes for mortgage industry
House Financial Services Committee chairman Barney Frank has apparently figured this out, and has some plans to put a stop to it. The New York Posthas some details on what some of Frank's proposals might be:
- Make it illegal for mortgage brokers and lenders to steer borrowers into higher-risk, exotic products in pursuit of the higher commissions that these loans generate.
- Hold mortgage originators and underwriters accountable for bad loans.
- Make the company that bundles mortgages into CDOs and MBSs responsible for the first losses on derivatives.
Of course lending standards are very tight right now, but markets have a pretty short memory and without regulation designed to rein in the screwing of naive of consumers, housing bubble part 2, second verse same as the verse, will be an inevitability.