Wednesday, September 17, 2008

Who Will Bail Out FDIC?

By John W. Lillpop

As Wall Street and the financial markets come tumbling down, who would have expected a conservative president to seize quasi-private enterprises and make them government property, and to bail out other private companies with loans involving billions of dollars of taxpayer money pinched from the U.S. treasury?

Whatever happened to welfare reform, tough love, and trusting the free market?

Why is the American Dream becoming more of a nightmare than a dream?

Why is the U.S. government more concerned with home ownership statistics for minorities than it is with high quality, well secured loans for qualified borrowers?

Why have some lenders extended credit to illegal aliens?

Why do well heeled mortgage lenders approve large loans without requiring at least twenty percent down payment?

What happened to the Four Cs of underwriting, Collateral Character, Credit, and Compensation, which used to be essential before approving a loan?

Why have lenders abandoned traditional debt-to-income ratios of 28 percent and 36 percent for housing expenses and total expenses, respectively, in favor of loans with much higher ratios?

Why are clients sold "Option Arm" loans without being told that such loans are dangerous instruments of negative amortization?

Why is it possible for just about anyone to get a "stated income" loan provided one's FICO score is high enough?

Why are "interest only" loans written?

Finally, in light of the financial nonsense taking place on a daily basis: WHO WILL BAIL OUT FDIC?

Or to put it more simply, how is your Chinese?