Wednesday, October 24, 2012
Bank of America is being Sued for Mortgage Fraud
The mortgage mess that we have experienced for the past several years is a large tangled web. The big players are still not done pointing the fingers of blame. It is hard to blame them when the stakes are so high.
Regardless of who takes the blame or how everything shakes out it would nice to imagine an open and free market for home loans. When the government is involved it causes people to do crazy things.
It is brilliant business as a bank to collect fees for loans you make and to then off load 100% of the risk onto the government. The problem is the government is poorly suited to ascertain risk. The government ends up owning or guaranteeing loans that no rational competitive business would get involved in The system also encourages creativity to get the government to take on more and more risk. That creativity as we have seen often can lead to fraud.
Get the government out and you will have more people paying attention because it is their money that is at risk.