Since Tom Blumer of BizzyBlog didn't have time for a post on this today (item #2), I thought I'd take a stab at it...Wouldn't it be great if we brought the joys of Sarabanes-Oxley to the housing crisis? That's what the US Senate thinks... The Wall Street Journal picks up the story:
A Senate agreement pushed Congress significantly closer toward a bill that would expand the federal government's role in propping up the housing market.Emphasis added.
After weeks of negotiations, Sen. Chris Dodd, a Democrat, and Republican Sen. Richard Shelby completed a plan Monday that would allow the government to insure up to $300 billion in refinanced loans for struggling homeowners. In a nod to a longstanding Republican concern, the agreement would also overhaul supervision of Fannie Mae and Freddie Mac, the enterprises that provide the lion's share of funding for U.S. mortgages.
While several hurdles remain, the bipartisan agreement, combined with positive signals from the White House, represents the clearest sign yet that Washington is ready for major legislation on housing. Some are comparing the bill to the 2002 Sarbanes-Oxley Act, enacted in response to Enron's collapse and other corporate scandals.
Sarbanes-Oxley was Congress' response to the accounting fiascos of the 90's and what it has done is make record-keeping an expensive chunk of every business's budget. That's real savings that is passed on to you...
By the way, wouldn't it be great if Congress had to operate under Sarbanes-Oxley too? As usual, the government thinks that these rules aren't worth their time and besides they are above the law.
Bottom line: the housing "crisis" (I'm still trying to figure out how we got to a crisis because people who couldn't afford a big house got one anyway and are stunned that they can't pay for it.) was started because liberals who run places Fannie Mae and Freddie Mac decided that "poor" people needed sub-prime loans in order to buy houses that they could not afford. Somehow, more paperwork and red tape will help!
Don't get me wrong, I think bringing in some adult supervision to Freedie Mac and Fanny Mae is a good start, but a better idea is to shut them down altogether.
Tom (or anybody else for that matter)...feel free to jump in and correct me if I'm reading this situation wrong...or if you have anything to add.
