Are the key players in Washington’s finance and mortgage lending issues up to the task of reforming our system. Do they even see the need?

Asking Price: $479,000
Address: 10 Fuchsia Irvine, CA 92604
{book5}

Was a long and dark December
From the rooftops I remember
There was snow
White snow

Clearly I remember
From the windows they were watching
While we froze
Down below

When the future’s architectured
By a carnival of idiots on show
You’d better lie low

Violet Hill — Coldplay

Who is the architect of our system for financing real estate? We know our current system enabled a massive housing bubble. Is that the system we want to keep in place?

If we reform this system, Christopher Dodd (shown below), Barney Frank, Ben Bernanke and Tim Geithner are the men we must to rely on to get it done right.

Great?

I suppose, it could be worse…

I have outlined both A Free-Market Solution to Prevent Housing Bubbles and Regulatory Solutions to Prevent the Next Housing Bubble. I am not holding my breath…. Neither is Paul Krugman:

In the grim period that followed Lehman’s failure, it seemed inconceivable that bankers would, just a few months later, be going right back to the practices that brought the world’s financial system to the edge of collapse. At the very least, one might have thought, they would show some restraint for fear of creating a public backlash.

I was startled last week when Mr. Obama, in an interview with Bloomberg News, questioned the case for limiting financial-sector pay: “Why is it,” he asked, “that we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs or N.F.L. football players?”

That’s an astonishing remark — and not just because the National Football League does, in fact, have pay caps. Tech firms don’t crash the whole world’s operating system when they go bankrupt; quarterbacks who make too many risky passes don’t have to be rescued with hundred-billion-dollar bailouts. Banking is a special case — and the president is surely smart enough to know that.

All I can think is that this was another example of something we’ve seen before: Mr. Obama’s visceral reluctance to engage in anything that resembles populist rhetoric. And that’s something he needs to get over.

Without leadership from the administration and a desire in Congress, reform has little or no chance.

Christopher Dodd is Democratic politician currently serving as the senior U.S. Senator from Connecticut, according to Wikipedia. Most importantly for this issue, he is Chairman of the Committee on Banking, Housing, and Urban Affairs. According to Michael Moore, Christopher Dodd is in Countrywide’s pocket. His involvement with the housing bubble is less well known than the other players. I do remember his idiotic populism appealing to homedebtors during the presidential campaign. He doesn’t seem to get it.

Now, Christopher Dodd wants to put the Federal Reserve in charge of out entire financial system. That doesn’t sound like a good idea to me, nor does is sound like a good idea to Calculated Risk. Imagine how bad Alan Greenspan could have screwed up our financial system if he would have been in charge of the whole thing.

Barney Frank is the United States House Representative for Massachusetts’s 4th congressional district since 1981 and a member of the Democratic Party, according to Wikipedia. He is also noted for his complete cluelessness concerning the housing bubble (great video BTW). He does not use a computer. Perhaps he is a good legislator, perhaps not. As chairman and of the ranking Democrat on the Financial Services Committee, he is one of the most powerful men in Washington when it comes to mortgage finance.

Both Christopher Dodd and Barney Frank are the ranking Democrats, and their party has a secure majority in both houses. If these two men can get the members of their own party to agree on legislation, it will get passed, and the President will sign it (This is true of anything the Democrats want to do between now and 2010).

According to Wikipedia, Ben S. Bernanke is the current Chairman of the Board of Governors of the United States Federal Reserve. Bernanke succeeded Alan Greenspan — the chief architect of the housing bubble — on February 1, 2006. He is just as clueless as his predecessor and Barney Frank. Perhaps he is a good central banker, perhaps not. He is arguably the most powerful man in Washington, and he certainly is the most powerful banker in the United States.

Timothy Geithner is the 75th and current United States Secretary of the Treasury, serving under President Barack Obama. He was previously the president of the Federal Reserve Bank of New York, according to Wikipedia. He is a classic crony who worked his way through the banking system. Is it likely that he will work to impose draconian regulations on the banking industry? I doubt it.

It is easy to criticise our government’s stooges from afar. They may really understand the problem and know the best solutions and recognize that it isn’t politically feasible to get the reforms past. That is giving them the benefit of the doubt. I think they lack the understanding and the desire to fix the problem.

Nothing will be changed.

When 100% financing comes back next time around, will you take the free money the banks are giving out?

Asking Price: $479,000

Income Requirement: $90,688
Downpayment Needed: $95,800

Purchase Price: $335,000
Purchase Date: 3/19/2002

Net Gain (Loss): $115,260
Percent Change: 43.0%
Annual Appreciation: 5.7%

Address: 10 Fuchsia Irvine, CA 92604

Beds: 3
Baths: 3
Sq. Ft.: 1,495
$/Sq. Ft.: $320
Lot Size: 1,495 Sq. Ft.
Property Type: Condominium
Style: Townhouse
Stories: 2
Floor: 1
View: Greenbelt
Year Built: 1974
Community: El Camino Real
County: Orange
MLS#: S589143
Source: SoCalMLS
Status: Active
On Redfin: 5 day

This is a beautiful home with 3 bedrooms 2.5 baths, formal living room with fire place, dining room, kitchen with granite counters, extra room off kitchen that is great for eating area or many have used this area as a family room with sofas and TV area, upstairs family room and office area, this home has a nice patio that leads to a 2 car garage. Close to great schools and shopping!

The HELOC abusers at this property did well during the bubble. They paid $335,000 back in March of 2002. They used a $268,000 first mortgage, a $50,250 second mortgage, and a $16,750 downpayment.

These owners periodically added to their HELOC, and finally in November of 2004, they refinanced their first mortgage for $448,000 and opened a HELOC for $100,000.

Total property debt is $558,000 assuming they maxed out their HELOC. Their pattern suggests they did.

Total mortgage equity withdrawal is $239,750.

Is this the kind of life we want to enable as a culture? Are these owners entitled to an extra $80,000 in mortgage equity withdrawal each year for spending money?

I suppose it is a good gig — if you can get it….