Remember the housing bubble that collapsed in 2007? There were a lot of reasons for that collapse–Congress was not innocent, the government encouraging sub-prime mortgages, putting quotas on mortgage companies telling them who they could loan money to (regardless of income qualifications), etc. Well, the government is in the process of laying the groundwork for a similar crisis.

On Friday, Hot Air posted an article by Stephen Moore about some current government actions that will have results similar to the housing bubble collapse of 2007.

The article reports:

Here we go again. The latest scheme by the Biden administration is to encourage families to borrow more money by using the equity in their home as collateral. Home equity loans are often very risky. If prices fall, home equity can become negative. There is nearly $18 trillion in home equity, and it’s one of the largest sources of savings and ownership for American families.

Now the Biden administration wants to encourage Americans to borrow even more at a time when credit card and auto debts are at an all-time high. If homes fall in value, families could slip underwater and default — just like during the subprime crisis.

As The Wall Street Journal points out, the other “likely losers” from this scam “would be taxpayers.” The evidence is indisputable from 2008 that the mortgages that ended in default were low-down-payment and low-equity loans.

Why in the world would President Joe Biden want to go down this dangerous road again?

In 2009, I shared the following information (here and here):

The bank is East Bridgewater Savings Bank which has no delinquent loans or foreclosures on its books.  The bank didn’t even need to set aside in money in 2008 for anticipated loan losses.   From late 2003 through mid-2008, East Bridgewater Savings made an average of 28 cents in loans for every dollar in deposit — a sharp contrast to the 90 percent average loan-to-deposit ratio among similar banks.

The FDIC recently criticized this bank for not lending enough, slapping it with a “needs to improve” rating under the Community Reinvestment Act, the Boston Business Journal reported.

According to the article:

“East Bridgewater Savings ended 2008 with $135 million in assets, deposits of $84 million, $87,000 in profit, and a Tier 1 risk-based capital ratio of 31.6 percent — more than three times higher than many community banks in Massachusetts, the Journal reported.”

It seems to me that this sort of behavior on the part of the bank should be praised–not criticized.  It used to be good business to lend money only to people who were likely to pay it back!

The average consumer has more common sense that the economic ‘experts’ in the government!