Rep. Barney Frank, the Massachusetts Democrat who did his part to engineer the home mortgage meltdown is at it again. It wasn't enough that Frank, from his position as a powerful House committee chairman, pressured banks into making home loans to people who weren't qualified. Now, his solution, is to pressure banks into making more sub-prime loans.
As the AP, via the Tribune, reported:
Rep. Barney Frank, D-Mass., said Friday that he would call top executives from the four big banks to a hearing next month. "We will be urging the banks to show full cooperation with this plan," he said in a prepared statement.
What plan is this?
Under pressure to stem the foreclosure crisis, the Obama administration launched a plan Friday to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break....
Borrowers who owe more on their loans than their houses are worth. Nearly 15 million homeowners fall into this category, according to Moody's Analytics. About 10 million of them owe at least 20 percent more than their house's current value.
These people would be helped in either of two ways: Their mortgage companies can cut the total amount they owe on their mortgage. Or they can refinance into loans backed by the Federal Housing Administration, which insures loans against default. The FHA will get $14 billion in incentive money from the federal bailout fund.
What's the big deal? By now $14 billion doesn't sound like much, what with trillions being tossed around here and there. With all the spending and borrowing going on, we have been desensitized to spending billions, when we ought to be spending nothing. What's another $14 billion?