Eureka! The cure for housing.

The Fed's solution to getting Main Street to buy houses they can't  afford (because prices are artificially high because of the Fed-engineered housing bubble) is to allow banks to issue loans that won't be paid back.  Again.  And have the bank not be liable for bad loans.  Again.  And have the bank pay their executives obscene bonuses on loan volume.  Again.  Gee...I wonder how this will turn out. 

Eureka!  The cure for housing!

Housing Study

Fed policy makers have been repeatedly frustrated by their inability to engineer a full-fledged recovery of housing through their easy-money policies.  If credit is key, then the most important policy maker when it comes to housing may not be Yellen, but Melvin Watt, the new director of the Federal Housing Finance Agency, which oversees government-controlled Fannie Mae and Freddie Mac.

Debut Speech

In his first speech as head of the agency, Watt announced this month new rules to reduce the risk that banks will have to repurchase bad mortgages from Fannie and Freddie. The changes are designed to allow lenders to relax credit standards.

Let's see...median incomes in the U.S.  have fallen 10% since 2000, while the cost of Home Ower-ship went up 25%.  I reckon we will have to make some "creative" loans. 

Maybe Melvin can coax Angelo "Fund-em!" Mozilo out of retirement...