By John Berlau

“How could they have been so stupid?” That’s the million-dollar question being asked as mortgage defaults have increased on loans that carried much more risk then lenders, borrowers, and investors anticipated.

But this question may be overtaken by one with a multibillion -dollar price tag years from now. That may be, “How could our elected representatives have been so stupid?” Despite the valiant efforts of fiscal hawks such as Sen. Tom Coburn (R., Okla.), and several House members in the conservative Republican Study Committee, both bodies of Congress have passed bills to put taxpayers on the hook for more risky loans from the Federal Housing Administration (FHA).

The Senate’s chief fiscal hawk, Tom Coburn of Oklahoma, was so concerned about the effects of both bills on taxpayers and the mortgage market that he put one of his famous “holds” on the Senate legislation to slow down its passage. “This bill only creates more opportunities for borrowers to receive government-backed loans, increasing the liability on American citizens, but not preventing the possibility of delinquency or default,” Coburn said in a statement. Read more...

Labels: Congress, Sen. Tom Coburn