CNN financial "expert" Susan Lisovich.."The FED's taken the last 6 months to figure out....."

What have they been working on so diligently??

This..

Banks need to verify a potential home purchaser's income and assets..

Whew!! It only took them 6 months to figure out what we ALL seemed to know ....like forever...

Banks used to require 20-30% down and made you show proof of long-standing income, complete with 4 or 5 years' worth of tax forms...bank statements etc....

And even then, there was a limit to what you could qualify for.. I forget the rule of thumb back then, but I think it was like... no more than 3 times your annual gross income...so an income of $60K would only qualify for $180K house..max..

They also only used to count ONE income in the family.. Back then it was for sexist reasons, but it inadvertently made home ownership safer, since the 2nd income was truly "extra", and the loss of that income, would not sink the family budget and throw them out of the house..

and likely to be coming down. Seem to recall: baseball great Jim Palmer pitching TV ads for loose-term loans from a money lending subsidiary (was it Money Tree?) of, was it the then-Wachovia Bank, with Wachovia losing some $4 billion from bad loans made by that subsidiary, and Wachovia being sold to another bank which retained the Wachovia name. Anyone who did not learn from that debacle is too dumb to be working for a financial institution, much less lending money. But let's look at the bright side: were not extremely bad loans, along with record-setting Federal deficit spending, about the only things that have kept junior's economy robust all these years and, glory be, with just a modicum of inflation. :D

Too many people were making too much money...the Ponzi scheme lasted for nearly a decade and I think some thought this game could go on indefinitely. Almost everyone saw their property values double (not to mention their taxes) and that meant there were gold in them thar hills...and with them more people paying more interest on higher property values and so on...home prices overheated. And where were the regulators? Making money as well. As long as the market was going up no one dare get in the way.

The greed went into overdrive with the passing of the bankruptcy bill in '05. This draconian boat anchor allowed banks to raise rates with no notice...all you had to do is mess up with one creditor and another could boost the rate. These banks thought that the fear of living on the streets would make people find money they didn't have...of that with the high property values they could liquidate and finish ahead. Short term greed also led many investors to get into the predatory lending game...many pensions and other money funds were loaded with these stocks and now are all but worthless.

Since the "Raygun Revolution" the banks and lenders lobbied and paid off their way to less regulation...bluring lines between lender and borrower and turned the SEC into a joke. Now we're supposed to take on what could be 5 billion of bad debt and pretend like nothing happened? And with their BFF Paulsen and Helicopter Ben with their hands on the purse strings, they'll get away with it.

because apparently the potential home buyer has no way of knowing what they can afford...

:eyes: