Almost all Articles LIE and say "Crapo plan would still preserve the 30-year loans"
I was checking out several articles including Seeking Alpha's article this morning (Senate-panel-to-discuss-winding-down-fannie-and-freddie). They state:
"The new agency (FMIC) would still preserve the 30-year fixed rate loans that are at the center of the mortgage system". Why are these articles NOT explaining that the 30-year will go the way of the Dinosaur once the Banks get control ?? it will not be in the Bank's best interest to grant 30-year loans, for which they will have to shoulder the initial portion of the Backstop burden themselves under the new plan.
Remember: Its not illegal RIGHT now FOR banks to do low interest rate, 30 year mortgages, with a low down payment. But they wont. There is no law that says, "Banks will not be able to write low interest 30 year mortgages with a low down payment" The only law is Adam Smith's Invisible hand of economomics whereby investors dont take on more risk than is absolutely necessary, and will move to an investment with the highest yield /lowest risk ratio, just like we line up to buy gas that is on sale for 1.99 a gallon.
Yes...they will "preseve" 30 year loans the way we "preserve" insect specimens. They kill 30 year mortgages by sticking a pin through them and show everyone how mortgages were back in 2014 before the kill fannie bill, and we all move either into homelessness or section 8 slums.