Be afraid, be very afraid...

I'm afraid that Congress and Representative Barney Frank are out to help us again and that is something to be frightened about. It's not that they don't start out with our best interests at heart, it's just that so much politics and so many stakeholders get to put their 2 cents into the process that we - the intended recipients of benefits - end up being the victims of the laws. Some of that is due to unintended consequences; however the lobbyists in Washington seldom leave anything to chance, so most of the problems were in fact intended consequences put into the laws by one group or another.

You can read what the National Association of Realtors has to say about this at http://tiny.cc/6WOc2 and read one of the Wall Street Journal stories about testimony to the Congressional group - http://tiny.cc/Najf7 or one of the stories that is critical of the legislation that appeared over the weekend - http://tiny.cc/IqbbT

The issue is not whether or not something needs to be done to rein in the wild lending practices of the past (although those horses are already out of the barn), but, rather that the new laws will end up hurting consumers by being so restrictive that lenders will turn off credit or make it too hard to borrow. There needs to be a happy medium reached between the old 20% down or no loan mentality and the “no job, no money, no problem” mind set of the real estate bubble era.

Whether Congress can find that compromise is the thing to watch here. Unfortunately they have a long and sad history of passing legislation that seems to be tossing a life ring to drowning consumers, only to be discovered that the ring is made of concrete, because the lobbyist for the American Association of Concrete Dealers wrote the bill. Unfortunately, as has been widely reported, some of the people advising Congress on various aspects of the economic recovery are the same Wall Street clowns who got us into this mess in the first place. Heaven help us!