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April 04. 2013 7:10PM

Obama, bank president: Home loans by decree

As the economy struggles to recover from a recession triggered in large part by a collapse in the housing market, which itself was caused in large part by too many people signing mortgages they could not afford, the White House is urging banks to lower their lending standards so that Americans with weaker credit can qualify for home loans. And here we go again.

Here is how The Washington Post summarized the Obama administration's new plan: "Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

"Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan..."

The faith this President places in his ability to manipulate the economy just so is breathtaking. Surely there are many Americans with credit scores below 700 who are financially trustworthy. Why are banks not lending to them? Because after the crash the administration got tough with banks, holding them accountable for foreclosures, and demanding tougher lending standards. Now, banks scared off by the heavy hand of Obama and the then-Democratic Congress are told to relax, lend more, and they won't be held responsible for the consequences - which will be insured by the federal government.

Perhaps that will work out just fine. If not, though, whom do you think Obama and Congress are going to blame? Bankers know. They also know that no matter what course they choose, they are at Obama's mercy. Don't lend, and get attacked for being greedy and uncaring. Lend to riskier borrowers, and get blamed if anything goes wrong. This is what it is like to do business under this President. Is it any wonder that the economy continues to struggle?


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