Tuesday, August 17, 2010

Pro-Mortgage Bloviation Abounds

The banking industry has instructed our government to continue pumping the value of home mortgages lest they be forced to reveal their balance sheets to be wishful thinking.  Uncle Sam had better keep a-pumpin' as there's trouble ahead.

Construction loans are cratering, taking out another sector where banks used to make money.  That's to be expected in a nation that paved over the few remaining green farm belts outside its megalopolises to lay down tract after tract of empty McMansions.  God bless America! 

It's too bad nobody told the Fed that banks needed so much more help, because they're about to implement a rule that will ban yield spread premiums.  Slap that limit on home loan liquidity and profitability and you've tied the banking industry's fate that much more tightly to whatever QE program the Fed dreams up next.  This one at least benefits the little guy a little bit. 

Full disclosure:  Author has no mortgage.