Ah, you knew it was coming, didn’t you?
From Bloomberg:
Mortgage bankers are pushing Congress to expand the U.S. government’s support of the market by guaranteeing private-industry home-loan securities and replacing finance companies Fannie Mae and Freddie Mac.
In other words, the U.S. Treasury would stand behind the credit worthiness — or lack thereof — of almost $2 trillion in mortgages. At this point it seems relevant to ask why do we need banks? They seem like needless, costly middle-men.
Bonus Observation: The folks at Institutional Risk Analytics say we are still on track for 1000 bank failures and note that commercial banks have ceased any lending that involves risk.
