Lenders would be required to make sure prospective borrowers have the ability to repay their mortgages before giving them a loan, under a proposal released by the Federal Reserve on Tuesday.
Wow. What a concept!
But won't that stifle "innovation" in the financial product field? That's what I heard in 2005-2006.
The Fed is seeking comments on the proposal through July 22. Please feel free to let The Bernank know your thoughts.... as this type of stifling regulation will destroy our mortgage market, where making a payment has become optional the past few years....and mostly reserved for "suckers".
I for one am against penalizing the banks with onerous terms like this - let the Canadian banks make viable loans, we are America! I much prefer the old system where no one in the daisy chain of the mortgage market gives a damn that the borrower can pay, and we bundle 1000s of these loans together, slap a AAA rating on it vampire squid style, and sell the CDO to small towns in Norway. Booyah.