OK, so the federal government is bailing out all these companies that played fast and loose with the markets, buying up their bad paper. The government is already in the mortgage business with VA loans and Freddie and Fannie–and now all the crap it’s buying. Why not just nationalize the industry at this point?
What’s the value-add of the mortgage companies, anyway? Deciding who is worthy of the loans, who will pay them back? Hah hah hah! Making accurate appraisals of value? Ho ho ho! Anything else?
There are many virtues to this idea:
*Want to make sure enough loans are being made in poor areas or to minorities? Just do it!
*Want to encourage home ownership? Just do it!
*Want to tighten or loosen the money supply? This is another way.
*Need funds to help balance the budget? To increase cash flow, the government could offer bonuses to those willing to make extra or early payments on their loans.
Home lending is a commodity service anyway, and the only way all these companies saw to “take it to the next level” was to do some really risky shit. If the government were running things, that wouldn’t be an issue. Just make reasonable loans at fair terms to as many people as possible.
I don’t want socialism lite–I want the real thing. Seriously. Capitalism as we know it is about to die, and the question is do we face up to that fact and accept the implications, or do we not. (I am trying to preempt the wingers from crying out here, “That’s socialism!” Fine with me.)
What say ye, Dopers? I am more interested in hearing about the financial reasons why this might not be a good idea than the moral ones. As I said above, I am no free-market fundie.