Fed Fixes the Future With Whim Flick

If you are just now coming to us, you have missed the content that existed dating back to April of 2007.  Our still current webhost seems to be on the verge of a long slow collapse, much like the financial sector, so we have decided to rebuild here where the likelihood of Google going belly up is akin to Freddie Mac or Fannie Mae falling apart... oh nevermind.  You know what we are saying.  

In the process we have simply redirected our URL to this location and will start fresh in the same style we used in the past, focusing out attention on financial  and political news, plus happenings in China and other parts of Asia; mixed in will be the usual personal observations, fairy tales, and frou frou.

While not much in the mood for posting, and annoyed at the prospect of attempting to migrate over 100 posts to this location, we took a little peak to see how the market fared today.  It was a busy weekend for Fed Head Bernanke and his associates, what with IndyMac yanked off the street and taken into custody.

But the markets today did pretty much nothing.  That fits with our long held belief that when in doubt, one should do nothing, and certainly with banks and other financial firms still hiding things in unpleasant places, doubt is the order of the day. 

The Associated Press (via Yahoo), informs us that the Fed is working to curb shady mortgage practices with new rules that come a little too late:

For risky borrowers, the new rules will bar lenders from making loans without proof of a borrower's income. The rules will require lenders to make sure risky borrowers set aside money to pay for taxes and insurance.

Lenders will also be restricted from penalizing risky borrowers who pay loans off early. Such "prepayment" penalties are banned if the payment can change during the initial four years of the mortgage. In other cases, a penalty can't be imposed in the first two years of the mortgage.

And, lenders would be barred from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value. The borrower need not have to prove that the lender engaged in a "pattern or practice" for this to be deemed a violation. That marks a change -- sought by consumer advocates -- from the Fed's initial proposal and should make it easier for borrowers to lodge a complaint.

The above legal practices probably make up the bulk of loans now defaulting, and one wonders why the Fed is just now getting around to changing the law with apparently  a flick of a magic whim.

The changes include additional fraud provisions, but one really has to wonder if the bulk of the people were rooked, or whether the many were compelled by their home lust and thus willing to engage in legal transactions that defied economic logic.

If we have to choose between the masses being stupid (as in defrauded) or evil (as in signing with their fingers a check their income can't cash), we lean toward evil.