Seeking Alpha

Housing is not "out of the woods," says Ben Bernanke in an Atlanta speech. Seemingly begging...

Housing is not "out of the woods," says Ben Bernanke in an Atlanta speech. Seemingly begging lending officers to go back to the ways of 2003, he laments "overly tight" mortgage standards, saying it's likely the "pendulum has swung too far the other way."
Comments (21)
  • Unbelievable....simply unbelievable. Requirements for buying a house should be immutable...20% down, real appraisals, 3 year proved cash flow and reasonable debt to income level...Fed chief begging for easier standards should be a warning to everyone that he sees that the day when he can't defend ridiculously low bond rates (ie. mortgage rates) is really close.
    15 Nov 2012, 01:41 PM Reply Like
  • Alas poor have stated the facts so well. How we have come to make the simple so complex is unknowable.
    15 Nov 2012, 03:18 PM Reply Like
  • Agree with you for a purchase, except I would say 10% down is enough. It was always a good benchmark and doesn't need to be 20%. Hope the days of 5% or 0% down are gone forever.
    16 Nov 2012, 01:28 AM Reply Like
  • I thought this was a joke when I read it first
    15 Nov 2012, 01:48 PM Reply Like
  • yeah seriously.... I mean heaven forbid banks actually try to verify income and the ability to pay the loan back
    15 Nov 2012, 05:00 PM Reply Like
  • Bernanke understates the shameful situation in this country. Banks are keeping the refinancing standards too high because they've got millions of homeowners yoked with low equity, high-interest home loans. They're making windfall profits on the backs of people just trying to hold on to their homes. Taxpayers bailed them out and give them free money at 0% interest to play games with commodities and derivatives, pay themselves million dollar bonuses for shooting fish in a barrel, while the average American is bled dry. It's a disgrace.
    15 Nov 2012, 01:55 PM Reply Like
  • bullseye medzjohn. the dynamic has been sickening. There should be some distinction between standards for refi and standards for purchase...
    15 Nov 2012, 03:31 PM Reply Like
  •'d almost think that someone planned this outcome would you.
    15 Nov 2012, 04:06 PM Reply Like
  • Sorry, but I know numerous folks with good credit that have gotten loans. The Government can't have it both ways, i.e., artificially low rates (which everybody knows have a shelf life) and at the same time expect banks to make new 30-year commitments at these rates AND with more generous credit and downpayment standards. That's exactly how we arrived where we were, recently.


    If th Fed wants to see enhanced lending volumes, both on housing and commercially, then, they have to allow rates to rise. Otherwise, they can make all those unsound loans, themelves.


    The banks have learned. They made the loans, at the original behest of the Government, and they took hundreds of billions in losses on them and have been harrassed, fined and sued relentlessly for doing so. I'm sure they'll be telling Ben or anybody else to whistle Dixie, if they are expected to go out on a new limb.
    15 Nov 2012, 04:15 PM Reply Like
  • It could be called a "short squeeze" on homeowners.
    18 Nov 2012, 01:28 PM Reply Like
  • Seemingly begging lending officers to go back to the ways of 2003--- he never said that , quit BS'ing
    15 Nov 2012, 02:06 PM Reply Like
  • Mr Bernanke, resign! Admit that you don't have any idea of what is going on, and your policies are merely throwing money at the problem. Let someone with some real world experience take your place. Say, a venture capitalist. Someone who can hold the feet of all those academics to the fire.


    Board member: "We need to provide more liquidity."
    Chairman: "Give me a timeline, milestones, outcomes."
    Board member: "Uuuhhh."


    Chaucer talked about the problem we have in the Canterbury Tales.
    Simple Simon
    Met a pie man
    Going to the fair.
    Said Simon
    To the pie man,
    "Can I taste your wares?"
    Said the pieman
    To simple Simon
    "Let me see your money."
    Said Simon
    To the pie man,
    "Indeed, I haven't any."


    We were trying to consume without producing. Eventually, the fraud becomes apparent.


    The Fed is still trying to pretend that the level of economic activity engendered by the bubble they created should be the natural level of economic activity without the bubble. And so they go to absurd lengths, trying to make it come true.


    "The emperor has clothes! See that beautiful gold coat he is wearing. Those custom fitted leather boots. You can't see them? They're there! Really! Just believe, brother, and you will see."


    It would be funny, like clowns performing, if it wasn't causing so much damage.
    15 Nov 2012, 02:23 PM Reply Like
  • He just figured that out. And he holds an Ivy league PHD.They created this giant super-size global credit bubble then they shut if off cold turkey. You cant cut off credit to so many people in a credit economy like ours and expect things to move right along as before. One would think they could find some happy middle ground 4 years later
    15 Nov 2012, 03:11 PM Reply Like
  • Yes, but believe it or not, we're actually in that happy middle ground right now. To date, we've been able to avoid the worst consequences of a debt-deflation bubble. I believe we're about to see the second leg of that, but if we don't, it will truly be historic.
    15 Nov 2012, 09:42 PM Reply Like
  • Deflection.....the FED really is powerless.
    15 Nov 2012, 03:19 PM Reply Like
  • Yes do it. But only if the banks make CDSes available to the masses. Better still if they allow us to pick and choose the ones most likely to default. Come on people, this is like the chance of a lifetime to make a ton of money.


    And people are still laughing at a possibility of hyperinflation? Within 3 years, I bet Congress will not only allow this to happen but they'll be on their knees begging Bernanke to "save the economy" by printing a ton of money and asking the Air Force to deliver them by helicopter.
    15 Nov 2012, 07:28 PM Reply Like
  • That it is, volatility is always good for that. You talking about the CDS or credit default swaps or insurance against credit default save for the premiums they collect for that insurance there is no money to pay off any claims , never was. That's illegal.
    15 Nov 2012, 09:02 PM Reply Like
  • Bernanke is correct. Home ownership rates are down considerably from pre-recession averages. Don't get the love affair with venture capitalists they are not gods so forgive me if I don't worship them. Key to prosperity in the long run is technological improvement. In the short run we need aggregate demand to increase and that isn't going to happen with falling prices. Debt is a medium term issue and when we talk about debt we need to talk about sustainable debt levels.
    16 Nov 2012, 12:52 AM Reply Like
  • "... Don't get the love affair with venture capitalists they are not gods so forgive me if I don't worship them. "


    I certainly don't worship them. But they are more important to our economy than the banks, who do seem to be worshipped, at least by the Federal Reserve. They are the tip of the spear for innovation and productivity growth. It only makes sense they have some say in the financial system. I would be happy to see a senior project manager from NASA, or an actuary (as David Merkel suggested) instead. Anyone who will question the group think that prevails.


    That is the main thrust of my comment. We have a coterie of macro economists deciding economic policy for the country, people who all see the world the same way. Their track record is abysmal, yet they sail on unquestioned. A venture capitalist is a gambler, making bets on uncertain outcomes. A successful venture capitalist asks lots of difficult questions of potential bets in order to reduce that uncertainty, or at least narrow it, before betting. We need that kind of questioning at the Federal Reserve. The justifications they offer for their policies are just short of 'because I said so'.
    17 Nov 2012, 12:59 PM Reply Like
  • I can attest to mortgage standards being high. My wife and I make $200K and have 800 credit scores and it took a year to refi our primary house with a 62% LTV. The hold up was we have business income and that threw stupid mortgage bankers for a loop. They actually had to calculate cash flow (I swear I spent three months convincing an underwriter that Depreciation on our Commercial building should be added back to cash flow). He ended up calling my accountant. But seriously it took 12 months to refi. I dont think mortgage standards are too high, underwriters are just too dumb.
    16 Nov 2012, 12:58 AM Reply Like
  • Frivolous comment.


    Comrade Bernanke, chairman of the central planning committee of the United States Collective, today addressed the central committee of the housing directorate. He suggested they were not meeting the target he had set, and they should strive to achieve his goals.


    After the meeting, there was a brief session with the press, witnessed by the local leaders of the proletariat. It began with a rousing rendition of The Internationale followed by the recitation of the US Collective pledge, 'From each according to his ability, to each according to his need'. The comrade then answered questions from the press, including US Truth, President's Progressive Thought, and Congressional Guidance. He suggested that the government would soon be opening stores where prices would be set by the central planning committee, and used for determining the rate of inflation. He indicated that prices would be significantly below those in private stores. When asked if there would be goods on the shelves, he stated the prices would be unrelated to whether there would be goods or not. The reporter for President's Progressive Thought daringly asked how the proletariat could have faith in the chairman given his track record of failure. The chairman calmly answered that past performance was not indicative of future returns. The fact this question was asked will lead to speculation of power struggle among the steering members of the Collective.


    As the comrade left for his next meeting, to decide the toilet paper production level for the coming year, there was a spontaneous gathering of the proletariat. They cheered and threw flowers as he strode to his car and was whisked away. There are rumors that he is unhappy with the high cost of current toilet paper, and is going to argue for lower quality in order to meet production targets set by the central committee.


    16 Nov 2012, 11:03 AM Reply Like
DJIA (DIA) S&P 500 (SPY)