Financial regulation overhaul for dummies
Some people still seem to think that President Barack Obama is an intelligent person. Others have figured that is not really all that true. What is clearly true, though, is that he seems to think that we are all a bunch of idiots who need someone like him to protect us from ourselves.
For example, as a part of his new financial overhaul plan, Obama wants to create a Consumer Financial Protection Agency, primarily to take over the oversight of mortgage practices. And one requirement for lenders as a part of the financial overhaul would be that they would have to offer customers so-called 'plain vanilla' mortgage plans with straightforward and affordable terms.
Obviously the concept of 'affordable terms' is subject to debate and can only be determined on a case by case basis. But the more interesting part of that proposal is the requirement of offering 'plain vanilla' mortgage plans.
Perhaps Obama and all of his czars missed the memo, but 'plain vanilla' mortgage plans have existed for decades. They have been known previously as fixed-rate mortgages. As most people already know, with a fixed-rate mortgage customers have a set interest rate at the time that they take out their mortgage which never changes for the duration of the loan. Therefore, the monthly payment will be exactly the same - until either the mortgage is paid off or the customers sell their homes.
How much more 'plain vanilla' can it get than that? If Obama needs any help understanding these types of mortgages then he could ask Chris 'Countrywide Mortgage' Dodd to explain how they work. After all, Countrywide Chris got a sweetheart fixed-rate mortgage at 4.5% back in 2003, when most other people were unable to get a fixed-rate mortgage at anything close to that kind of a rate. Thank goodness that Dodd is now helping to clean up all the corruption in the financial industry - he is certainly a subject matter expert on the issue.
In the past decade or so, there were many people who borrowed money using adjustable-rate mortgages in order to qualify to buy a home that they really could not afford. Then when those interest rates increased they suddenly found themselves unable to make the monthly payments. These are the people that Obama is hoping to save from themselves. Of course, had the Democrats and their special interest partners like ACORN not threatened and/or blackmailed lenders to provide loans to those who could not afford to repay them then there really would not be too many people in need of saving now.
However, since Obama still feels the need to 'heal the world' and save us from ourselves, does he really need to do so by suggesting an overhaul of the entire financial system or could he have just suggested the elimination of adjustable-rate mortgages? The latter seems like a much better and less-expensive solution rather than setting up yet another new government bureaucracy or appointing another new 'czar' to make sure that Americans are living within their means.