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Housing Crash Part 2 On It's Way?

Thu Feb 18, 2010 5:09 pm

This is a little disturbing to say the least. I had a feeling (well I knew better than to buy into the media's BS that 'we're finally out of the $hitter'...). I feel bad for all the folks who are trying to sell and/or can't keep up with their mortgages. This from a report to congress from the Secretary Inspector General for TARP, Neil Barofsky, and is indeed troubling:

SIGTARP -- not a Bond villain but Barofsky's shorthand title -- sums up all the sundry spending in one handy place. The Federal Reserve has been buying mortgage-backed securities and other mortgage-related debt in enormous volume, projected to reach $1.2 trillion by the time the effort expires at the end of March. Treasury is spending hundreds of billions more to capitalize Fannie Mae and Freddie Mac, so the agencies can continue to finance home mortgages. Congress has extended the $8,000 tax credit for first-time homebuyers and added a $6,500 credit for existing owners buying new homes. And while Treasury's $75 billion Home Affordable Modification Program is designed to forestall foreclosure for homeowners, its direct (and intended) effect is to keep home prices high.

"Combine all that spending to boost home prices with a still-bloated financial industry – too big to fail, expecting to get bailed out, and rewarding executives with huge bonuses in exchange for taking big risks – and, warns Barofsky, the U.S. financial system is headed for The Great Crisis, Part II. "Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," cautions the report."


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We often judge others by their actions, but ourselves by our intentions.

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